[Click eStock] Korea Center Expected to Evolve into a Big Data Company

[Asia Economy Reporter Lee Seon-ae] Yuanta Securities announced on the 14th that it maintains a buy rating and a target price of 12,000 KRW for Korea Center.

Researcher Lee Jin-hyeop of Yuanta Securities stated, "Korea Center's Q4 sales are expected to be 101 billion KRW (+13.6% YoY) and operating profit 8.8 billion KRW (+102.8% YoY). With the recovery of the overseas direct purchase business, which had faced difficulties due to COVID-19, an improvement in operating performance is anticipated. Along with stable growth in the core business, the expansion of the big data business through synergy creation with Danawa is expected to positively impact the company's stock price."

Korea Center acquired a 51.29% stake in Danawa for 397.9 billion KRW on November 26. This values Danawa at 776 billion KRW, with a control premium of about 140% compared to the current stock price. On January 14, it attracted a total investment of 397.9 billion KRW from MBK Partners through a paid-in capital increase, CB, and BW. The funds raised from MBK are expected to be used for the Danawa acquisition. Based on consensus estimates, assuming Danawa's 2022 net profit of 32.5 billion KRW and that all CB and BW convert to common stock, the calculated earnings per share (EPS) is 252 KRW, which is not significantly different from the existing EPS forecast, so there is little change in shareholder value. With this investment, the company's largest shareholder is expected to change to Korea E-commerce Holdings (MBK Partners, 44.5% stake).

Following the acquisition of Danawa, synergy effects with its subsidiary Summers Platform (Enuri.com) are expected. Both companies operate price comparison commerce platforms and have sales data, while Summers Platform also secures delivery data through Sweet Tracker. By linking this data, it is expected that anonymized and processed secondary data can be sold to third parties or used in advertising solutions. Summers Platform generates annual big data sales of 16 billion KRW, and Danawa also records data sales of about 5 billion KRW.

The researcher said, "To maximize the synergy effect of the data business between the two companies, a merger may proceed in the future."