Emart Benefits from Prolonged COVID-19... "Expecting Strong Performance"

Demand for Food Purchases Strengthens as Dining Out Decreases

[Asia Economy Reporter Geum Bo-ryeong] As the spread of the novel coronavirus infection (COVID-19) prolongs, Emart appears to be benefiting from the situation.

According to the Korea Exchange on the 11th, Emart's closing price on the 8th recorded 179,000 won. During the trading session, it surged to 184,500 won, reaching a 52-week high.

Emart's stock price has shown a sharp rise since the beginning of this year. Considering the closing price was 151,500 won on December 30 last year, it has already increased by 18.15% this year alone.

Strong earnings prospects contributed to the stock price increase. Regarding Emart's fourth-quarter results last year, KB Securities estimates sales of 5.6286 trillion won and an operating profit of 40 billion won. Sales are expected to increase by 17% year-on-year, and operating profit is expected to turn positive.

For offline discount stores, thanks to COVID-19 social distancing, sales and operating profit are expected to grow by 4% and 23% respectively compared to the previous year. The decline in dining out led to a clear increase in demand for food purchases. Traders, No Brand, and others are in similar situations. Emart is also remarkable online. As online food purchases increase, Emart Mall is driving the growth of SSG.COM.

Researcher Park Eun-kyung of Samsung Securities analyzed, "The significant increase in market share within the food and beverage market through online and offline synergy, especially the substantial rise in SSG.COM's recognition due to COVID-19, is why the market should continue to focus on Emart despite concerns about a slowdown in post-COVID-19 home dining demand growth."

The earnings outlook for the first half of this year is also bright. The base was low in the first quarter last year due to the inability to sell public masks and in the second quarter due to the inability to use emergency disaster relief funds. This allows for expectations of a significant increase in operating profit. Researcher Ha Jun-young of Hi Investment & Securities explained, "The turnaround of discount stores will continue this year, and Traders' high growth is expected to persist due to changes in consumption patterns."