[Asia Economy Reporter Ji-hwan Park] Hanwha Investment & Securities on the 6th expressed a 'Buy' investment opinion and set a target price of 220,000 KRW for Emart, expecting strong performance to continue in the first quarter of this year.
Nam Seong-hyun, a researcher at Hanwha Investment & Securities, said, "The positive earnings growth in the fourth quarter of last year is expected to continue into the first quarter." He explained that offline traffic recovery appears to be progressing rapidly, and the contribution to sales is expanding due to growth in home appliances and furniture sales. He also cited the profitability turnaround effect from closing unprofitable stores and the reduction of losses at SSG.com due to high growth in online food sales.
Hanwha Investment & Securities estimated Emart's total sales in the first quarter to increase by 13.9% year-on-year to 5.9339 trillion KRW, and operating profit to increase by 102.2% to 97.9 billion KRW.
They also forecast that the performance improvement of subsidiaries will begin in earnest. As the opening of the Chosun Hotel is partially completed, the cost burden is expected to ease. The restructuring of the Shinsegae Food business division, effects from the closure of unprofitable sites, reduction of losses at Emart 24 due to new store openings and recovery of existing stores, and an increase in SSG.COM transaction volume due to more stores utilizing the PP Center are all anticipated.
Researcher Nam said, "If the SSG.com open market is launched, the increase in transaction volume is expected to level up further," adding, "They have established competitiveness in the food sector, resulting in high consumer loyalty, and the expansion of product categories will enable the attraction of new customers."
He also added, "They can build a comprehensive mall format, and for some product categories, an O2O (online-to-offline) strategy linked with Emart stores is expected to be implemented."
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