[Click eStock] "Emart, Spring After 4 Years... Target Price 130,000 Won"

On the 7th, Kiwoom Securities raised the target price of Emart from 68,000 won to 130,000 won, expecting Emart's first-quarter operating profit to exceed market expectations and anticipating a positive spillover effect due to the weakening of Homeplus's operating power.

Kiwoom Securities forecasted Emart's first-quarter operating profit on a consolidated financial statement basis to be 142.7 billion won, an increase of 95.6 billion won compared to the first quarter of last year, surpassing market consensus. The annual operating profit forecast for this year was also raised to 511.3 billion won.

Analyst Park Sang-jun analyzed, "Despite sluggish domestic consumption sentiment due to increased political uncertainty, this is thanks to company-wide fixed cost reductions centered on discount stores and SCK Company, operating losses classified under equity method income from Gmarket Global, and reduced amortization expenses of purchase price allocation (PPA) for intangible assets (25.7 billion won)."

Kiwoom Securities also predicted that Emart would benefit from the spillover effect due to the commencement of corporate rehabilitation procedures and weakening operating power of its main competitor, Homeplus. They judged that a decline in market share is inevitable due to Homeplus's liquidity deterioration and weakened bargaining power with major suppliers.

He analyzed, "It is estimated that about 50% of the stores where Emart and Homeplus overlap in commercial districts. From as early as March, the same-store sales growth rate, centered on discount stores, could rebound, and the operating leverage effect from increased sales could be strengthened."