[Click eStock] "Emart, Performance Improvement Expected from Q3... Target Price Up"

Target Price Raised from 70,000 Won to 83,000 Won

IBK Investment & Securities raised the target price for Emart from 70,000 won to 83,000 won on the 17th, anticipating that earnings improvement will begin from the third quarter of this year. The investment rating was maintained as 'Buy.'

Emart's third-quarter earnings are expected to exceed market expectations. Nam Seong-hyun, a researcher at IBK Investment & Securities, stated, "Emart's third-quarter earnings are projected to show consolidated sales of 7.9939 trillion won, a 3.7% increase year-on-year, and operating profit of 137.8 billion won, a 77% increase, which is expected to surpass both market and our expectations." He explained, "The reasons for expecting earnings improvement include profitability improvement effects due to discount store outlet optimization and structural improvements, the base effect of last year's Shinsegae Construction provision, price increases on some SCK products and store profitability improvements, and ongoing efficiency efforts in the online business division including SSG.com."

Despite a same-store sales growth rate of -0.3% in the second quarter, Emart's actual operating profit improved by 2.8 billion won compared to the same period last year. Researcher Nam said, "The third-quarter same-store sales growth rate is estimated to be in the mid -2% range, and considering that the third quarter is a period with high absolute margins due to seasonal peak and the fixed cost reduction effects carried out in the first half, discount store profit improvement is expected to be even greater."

The earnings improvement trend expected from the third quarter is also likely to continue going forward. Nam analyzed, "In the short term, the fourth-quarter same-store sales growth rate is expected to surpass the third quarter due to differences in holiday timing, and the base effect of Shinsegae Construction is expected to become more pronounced. In the mid to long term, profitability improvement from changes in online operation strategies and efficiency effects from offline store optimization are expected to be realized."

Attention should be paid to Emart's business division restructuring and efficiency efforts. Researcher Nam said, "Recent actions such as the sale of Jeju Soju, withdrawal from Smoothie King, existing offline restructuring, and delisting of Shinsegae Construction are interpreted in the same context, and comprehensive efficiency improvement effects are anticipated."

This content was produced with the assistance of AI translation services.