[Click eStock] "Cafe24, Core Business Unit Sales Growth Continues"

IBK Investment & Securities Report

[Asia Economy Reporter Minji Lee] IBK Investment & Securities maintained a buy rating and a target price of 42,000 KRW for Cafe24 on the 2nd.

In the fourth quarter of last year, the company recorded sales of 70.7 billion KRW, a 17% increase compared to the same period last year. Operating profit was 3.5 billion KRW. Minhee Lee, a researcher at IBK Investment & Securities, said, “Sales were in line with expectations, but profitability fell short of market expectations due to increased fixed costs from the expansion of supply chain services (fulfillment, product supply) and continued investments.”

Notably, the company’s core business units, Payment Solutions and EC Solutions, are showing growth. Recently, the company reorganized its business structure into EC Platform, Infrastructure, and Other Organizations. The EC Platform consists of Payment Solutions, EC Solutions (SMS, Domain), Business Solutions (CS, Operations, Sales Agency), Supply Chain Services (Fulfillment, Product Supply), and Marketing Solutions (Advertising, Consulting).

Payment Solutions and EC Solutions grew by 23% and 38% respectively last year compared to the previous year, significantly outperforming the company-wide sales growth rate of 14%. The sales-to-GMV (Gross Merchandise Volume) ratio was 0.59% and 0.27%, maintaining an upward trend compared to 2019 (0.57%, 0.23%).

This year, GMV is expected to increase significantly due to a recovery in the fashion sector. According to Statistics Korea, the domestic online shopping mall transaction amount reached 161 trillion KRW last year, growing nearly 19%. Despite the sluggishness in the fashion sector due to COVID-19, the rapid growth in non-fashion sectors such as daily necessities and food appears to have had an impact. The researcher said, “Overall GMV grew 18% last year due to the rapid growth in the non-fashion sector, and if the fashion sector recovers, GMV is expected to increase by 16% this year.”

Researcher Minhee Lee added, “Although low profitability continues due to increased investment costs to enhance competitiveness, the high growth of the EC industry and the growth trend of core sales support a positive outlook for the stock price.”