NH Investment & Securities evaluated on the 24th that ECHOMARKETING, a marketing specialist company, is expected to have poor performance in the first quarter (January to March). It maintained the investment opinion of "hold" and adjusted the target stock price downwards by 17% from 12,000 won to 10,000 won. The closing price of ECHOMARKETING's stock on the previous trading day was 8,710 won.
NH Investment & Securities estimated that ECHOMARKETING will record consolidated sales of 63.5 billion won and operating profit of 3.2 billion won in the first quarter of this year. The operating profit is expected to decrease by 37% compared to the same period last year and fall short of market expectations.
Research Institute Lee Hwa-jeong of NH Investment & Securities noted, "In the advertising agency institutional sector, seasonal off-peak periods have been compounded by political uncertainty, resulting in a slowdown in advertisers' execution demand for marketing expenses and so forth." They explained, "In the media commerce institutional sector, both of the flagship products, Andar (athleisure) and Mongje (air mattress), fall within the off-peak season."
The Research Institute explained, "While external growth is expected to be limited, it is inevitable that the increased labor cost burden will also rise as the workforce is expanded in the fields of artificial intelligence (AI) and data enhancement." As of the end of last year, the number of employees on a consolidated basis was 361, marking a 24% increase from the previous year.
"It has been a year since we activated global sales for our subsidiaries Mixsoon (skincare brand, North America) and Finger (nail brand, Japan)," they added. "Thanks to strong marketing capabilities, the global recognition of the brands has been significantly enhanced, but in terms of performance, the benefits have not yet been confirmed."
The Research Institute's judgment is that in order to enhance investment attractiveness, it should move beyond merely repeating proof of marketing capabilities and show hints of performance growth. They stated, "Similar to past domestic business expansion cases, the increase in client brand recognition is not leading to strengthened performance for ECHOMARKETING." They added, "A review of the investment opinion will be possible when a stable quarterly performance is continuously followed by consistent results in the future."