Hana Securities evaluated that ECHOMARKETING has not generated operating profits exceeding 60 billion won for several years, noting that global expansion or diversification into new consumer goods is desperate. They maintained an investment rating of 'buy' for Hana Securities and adjusted the target stock price down from 15,000 won to 13,000 won. The closing price of ECHOMARKETING on the previous transaction day was 9,360 won.
ECHOMARKETING recorded sales and operating profits of 94.5 billion won and 10.7 billion won, respectively, in the fourth quarter of last year. This represents an 8% increase and a 24% decrease compared to the same period of the previous year. The operating profit fell short of the market consensus estimate of 15.5 billion won.
Lee Gi-hoon, a Research Institute at Hana Securities, said, "The launch of new products and global expansion has been delayed more than expected, leading to annual operating profits of around 50 billion won," adding, "Since expanding performance and valuation through global expansion will inevitably take some time, short-term adjustments will continue."
The Research Institute said, "Due to sustained poor performance and derating, there is not much difference in valuation by business unit," and changed the target price calculation method from the existing sum of institutional sectors to the price-to-earnings ratio (P/E) method. They then lowered the target price by 13% applying the target price-to-earnings ratio of 12 times.
The Research Institute noted, "As the sustained poor performance of Daily & Company continues, it has turned to a loss," and stated, "Considering that it recorded operating profits of over 10 billion won annually in 2023, the launch of new category products is inevitable."
The Research Institute believes that a full-scale global expansion is expected in the second quarter of this year (April to June). He noted, "Since early last year, we have been pushing for global expansion focusing on high-income countries, but this has been considerably delayed compared to market expectations," adding, "Both Australia and the United States aim for significant global sales growth in the second quarter, so some results will be confirmed in the second half of the year."
He added, "We need to watch whether global expansion or the launch of new products will proceed as scheduled in the second quarter."