Emart's operating profit seen rising 19.6% next year on spillover gains from Homeplus

[Financial News] Korea Investment & Securities said on the 12th that it expects Emart's standalone operating profit next year to increase 19.6% from this year, on the expectation that spillover benefits from Homeplus will continue next year. The firm maintained its “Buy” recommendation on Emart but lowered its target price from 115,000 won to 95,000 won.
Myung-joo Kim, an analyst at Korea Investment & Securities, said, “In the third quarter, discount stores' same-store growth was 10.6% year on year, the highest since 2013. Operating profit at discount stores also rose 65.7% year on year to 90.8 billion won. This was achieved as the volume handled by SSG.com’s Picking and Packing Center (PP Center) increased 18% year on year.”
Kim added, “Payment volumes at Starbucks are recovering, and the core business, which is benefiting from Homeplus, is expected to maintain a favorable trend in the fourth quarter and next year.”
Emart's consolidated revenue in the third quarter was 7.4919 trillion won, and operating profit was 46.1 billion won, 71.7% below consensus. This was due to operating losses of 98 billion won at Shinsegae Engineering & Construction Co., Ltd. and 45.3 billion won at Starbucks. Shinsegae Engineering & Construction Co., Ltd. acquired the Myeongil store from Emart in May, and related taxes were incurred as consolidation adjustment expenses.  


[email protected] Kang Gu-gwi Reporter