April 18, 2024

• 

[THE INVESTOR] E-mart will pick up from the third quarter after a slow second quarter, said KB Investment and Securities on July 20, lowering the target price to 310,000 won (US$272.48) from 340,000 won while maintaining a “buy” recommendation. 

Its net revenue in the second quarter will increase 6 percent on-year to 4.03 trillion won satisfying market expectations while operating profit will climb 2 percent to 56.7 billion won, 11 percent below consensus, said analyst Park Sin-ae. 

Annual net revenue will rise 7 percent from last year to 17.04 trillion won and operating profit 7 percent to 605.8 billion won, estimated the analyst. Operating profit from offline discount stores will decline by 5 percent on-year as business hours are shortened and wages increased, but overall operating profit will gain 7 percent, as its hypermarket chain Traders grow in size, losses from online malls shrink, real estate affiliate Shinsegae Property goes into the black and Shinsegae Food posts strong earnings, she said. 

Losses from its discount store business in China and Chosun Hotel’s duty-free division will be excluded from earnings, Park added. 

The company’s stock price will begin to recover meaningfully when existing stores show signs of improvement from July, and higher-than average temperatures will have a positive impact for the retailer, according to the analyst. 

Meanwhile, with wages having increased amply at the beginning of this year, cost burdens from next year’s minimum wage hike will be limited, she noted. 

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