[Click eStock] "Emart, Reconfirming Investment Points... Target Price Raised"

Shinhan Financial Investment Issues 'Buy' Rating and 240,000 KRW Target Price... Closing Price on 13th at 179,500 KRW

[Asia Economy Reporter Geum Bo-ryeong] Last month, Emart's same-store sales growth exceeded expectations, reaffirming its investment points, according to an analysis.

On the 14th, Shinhan Financial Investment reported that Emart's same-store sales growth last month recorded a 29.1% increase for Traders and a 9.8% increase for hypermarkets compared to the previous year. SSG.COM's transaction volume is estimated to have increased by about 47%. Transactions from dedicated centers and store shipments each showed growth of over 60%.

Heejin Park, a researcher at Shinhan Financial Investment, explained, "The overall trend exceeded previous estimates. This appears to be due to increased food demand caused by the social distancing level 2.5 plus alpha maintained throughout December," adding, "Food sales at marts, which grew about 10% and 5% in October and November respectively, increased by about 20% in December."

Operating profit on a consolidated basis for the fourth quarter of last year is estimated at 83 billion KRW. Compared to the previous year, a turnaround to profitability is expected. Researcher Park emphasized, "Online operating profit and loss is expected to be -2 billion KRW, but since growth expanded without an increase in costs, it opens a positive outlook for further profit improvement."

Considering that last month's strong performance also reflected the impact of social distancing, it is a time to consider the sustainability of future growth. However, since September last year, the same-store sales growth rate in the mart sector has been maintained. Researcher Park believes that the benefits from structural adjustments within the business format, ongoing since last year, will continue.

Shinhan Financial Investment gave Emart a 'Buy' rating with a target price of 240,000 KRW, up from the previous 210,000 KRW. The closing price on the 13th was 179,500 KRW. Researcher Park stated, "We maintain a buy opinion based on investment points such as 'mart bottom, online competitiveness, consolidated profit improvement + benefits from business format restructuring,'" adding, "This is a stock that requires investment in structural direction rather than profit-taking through trading."