April 26, 2024

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[THE INVESTOR] E-mart widely beat the fourth-quarter market estimates last year, said KTB Investment and Securities on Feb. 6, raising the target price to 250,000 won (US$219.49) from 230,000 won and maintaining a “buy” recommendation. 

“The hypermarket industry’s growth rate in the fourth quarter last year was quite low at minus 2.3 percent, but E-mart’s revenue from discount stores grew 3.7 percent on-year,” said analyst Lee Nam-jun. “Sales of fresh food increased 7 percent and revenue from Traders, its new growth engine, jumped 38 percent.”

E-mart’s operating margin rose 1 percent point to 2.7 percent, and will conspicuously improve in line with its revenue increase, as large fixed costs are characteristic of the industry, said the analyst, estimating that its operating profit will hike 16.7 percent this year to 638.1 billion won.

NH Investment and Securities echoed the analysis, raising the target price to 270,000 won from 220,000 won and maintaining a “buy” recommendation. 

Its hypermarkets’ competition with e-commerce site Coupang eased and warehouse chain Traders grew in size, explained analyst Lee Ji-yeong. Its sister-affiliates Chosun Hotel, Everyday and Shinsegae Food turned to black as well. 

“E-mart’s dominance in the market across business sectors is growing and its differentiated growth is showing,” said the analyst forecasting that its earnings will increase in earnest this year. 

By Hwang You-mee (glamazon@heraldcorp.com)