April 19, 2024

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[THE INVESTOR] E-mart is underestimated and now is the time to actively purchase its stocks, said Yuanta Securities Korea on Nov. 21 maintaining a “buy” recommendation and 285,000 won (US$251.66) target price.

Its price-to-book ratio has declined to 0.6 times, while fixed costs including personnel and lease are undermining its profits. On the other hand, its rival Lotte Shopping is drawing investors with its strong momentum. However, the retail giant is the most aggressive in e-commerce among offline companies. It is a pioneer in the industry and has the capacity to tackle overseas markets. Personnel costs rise will slow down next year and its move to shorten discount stores’ business hours will have a positive baseline effect on its earnings, said analyst Lee Jin-hyeop.

Some are fretting that building an exclusive logistics center for online business might undercut its profits. Unlike E-mart’s online mall, though, Shinsegae Mall is making profits and E-mart Mall’s depreciation cost is only 2 percent of revenue from the logistics center, noted the analyst. 

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