[Click eStock] "E-Mart, Concerns Over Q2 Earnings Are Excessive"

On September 2, IBK Investment & Securities pointed out that the market's concerns over E-Mart's stock price correction following its second-quarter earnings announcement are excessive. The company is implementing strong cost-efficiency policies, and continued profit growth is expected in the second half of the year. The investment opinion remains 'Buy,' with a target price of 104,000 won.

In the second quarter of this year, E-Mart posted a consolidated operating profit of 21.6 billion won, returning to profitability for the first time in four years since 2021. On a separate basis, operating profit also turned positive at 15.6 billion won. During the same period, consolidated sales amounted to 7.039 trillion won, a 0.2% decrease compared to the same period last year, and the company ended the quarter with a net loss of 31.4 billion won.

However, despite the solid earnings, the stock price has been declining rapidly. There has been a correction of about 30% from the peak, and this trend has accelerated since the second-quarter earnings announcement. This is attributed to concerns that the underperformance of the online business division could hinder the company's intensive profitability improvement efforts.

Nam Sung-hyun, a researcher at IBK Investment & Securities, cited five reasons why he believes the market's concerns are excessive. He stated, "It is necessary to consider the actual effects by combining the online deficit and the improvement in standalone margins at discount stores, and overall performance improvement, excluding online, exceeded market expectations." He added, "With the suspension of direct logistics center operations in the third quarter, fixed costs are likely to be alleviated, and effects from the restructuring of the Gmarket Korea division can also be expected." He also noted that the performance of key subsidiaries exceeded market expectations.

Researcher Nam emphasized, "E-Mart has not focused solely on reducing simple fixed costs while implementing strong efficiency policies for both offline and online operations." He continued, "The company has pursued efficient business restructuring, including focusing the distribution network for the online business, strengthening offline operations, and expanding purchasing power through the integration of product categories and business divisions. With the planned sale of the Neo Logistics Center in the second half, the fixed cost burden from the logistics center, which has been a cost pressure, is likely to be alleviated."