[Click eStock] "Emart, Performance Improvement Becomes Visible... Investment Opinion and Target Price Up"

Investment Opinion Raised from 'Trading Buy' to 'Buy'
Target Price Increased by 49% Compared to Previous Level

Shinhan Investment Corp. raised its investment opinion on Emart from 'Trading Buy' to 'Buy' and increased the target price from 67,000 KRW to 100,000 KRW on the 2nd, expecting visible performance improvement starting this year.

Researcher Sanghoon Cho of Shinhan Investment Corp. stated, "We are raising the target price by 49% compared to the previous level," adding, "We have raised our earnings estimates due to visible synergies from the offline business integration and eased competition. The performance improvement driven by offline business integration synergies and strengthened core competitiveness is expected to become apparent from this year."

The effect of structural improvement is expected to appear from the first quarter of this year. Researcher Cho analyzed, "Sales and operating loss for Q1 are expected to be 7.23 trillion KRW and 135.8 billion KRW, respectively, exceeding the consensus (average securities firm forecast) by 23%," and added, "Even after excluding the amortization expense of Gmarket’s Purchase Price Allocation (PPA) (24 billion KRW per quarter), the results are expected to surpass market expectations. Although external growth was disappointing amid domestic consumption stagnation, both the standalone and subsidiary businesses are expected to perform well due to overall eased competition." He further explained, "Standalone sales remain sluggish (discount stores -0.6%, Traders 3.2%), but gross profit margin improves due to integrated purchasing effects, and cost reduction effects are expected to accelerate following last year’s voluntary retirement and overall eased competition, leading to a 22% increase in operating profit."

He emphasized the need to focus on strengthening core business competitiveness. Researcher Cho said, "Structural performance improvement and return on equity (ROE) increase are expected through strengthening core business competitiveness," adding, "The low earnings visibility of subsidiaries is also being resolved through the absorption merger of Shinsegae Construction, logistics efficiency improvement of SSG.com, elimination of Gmarket PPA amortization expenses, and changes in property accounting standards."

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