[Click eStock] "Easywell, Undervalued Among Domestic Untact-Related Consumer Companies"

[Asia Economy Reporter Oh Ju-yeon] NH Investment & Securities analyzed on the 27th that Easywell's first-quarter performance grew due to an increase in online transaction volume caused by the novel coronavirus infection (COVID-19), and expects additional performance growth in the future. At the same time, it explained that Easywell is the most undervalued among domestic non-face-to-face (untact) related consumer companies.

Easywell's first-quarter performance recorded sales of 25.9 billion KRW and operating profit of 5.5 billion KRW. This is interpreted as resulting from an increase in welfare point online usage rate, strengthened shopping mall competitiveness due to the expansion of lowest-price items, and growth of its subsidiary Easywellness.

Researcher Lee Hyun-dong said, "In the first quarter, more than 30% of the entrusted welfare budget was transacted online due to COVID-19, and the amount of welfare points used online increased by 15% compared to the previous year," adding, "Online transactions can collect fees of 5-20%, so profitability is higher compared to offline." He also added that consumption patterns changed from low-profit products (tourism) to high-profit home appliances and daily necessities due to COVID-19, resulting in an operating profit margin of 21.3%.

Researcher Lee said, "From April, all product prices were converted to the lowest online prices, which means an expansion of the front market," and predicted, "The expansion of consumption through personal payments beyond limited welfare points will lead to additional performance growth."

However, compared to domestic untact consumption-related companies, it is currently analyzed to be undervalued.

Researcher Lee said, "Easywell's welfare business related to health management programs provided to employees, triggered by the implementation of the Emotional Labor Protection Act and COVID-19, is growing in various ways," and said, "Easywellness, which provides psychological counseling programs, recorded first-quarter sales of 930 million KRW, a 78% increase compared to the same period last year, and expects annual sales of 7.8 billion KRW (30.3%) this year."

He added, "The expansion of additional services beyond psychological counseling will accelerate performance growth," and added, "Easywell's expected price-earnings ratio (PER) for 2020 is only 17.2 times, while global welfare-related companies such as Edenred have 33.4 times, Benefit One has 59.3 times, and the average PER of domestic untact consumption-related companies is 51.4 times, indicating it is significantly undervalued."