Hanwha Investment & Securities said on the 6th that the impact of the war supplementary budget on E-MART will be temporary, but the impact of the Homeplus Co. restructuring will persist. It maintained a Buy rating and a target price of 150,000 won. E-MART's previous session closing price was 90,200 won.
With the war extra budget approved by the Cabinet, local currency is also expected to be paid this year to the bottom 70% by income. Because local currency, like the livelihood support payment, cannot be used at big-box retailers, the impact on big-box sales is inevitably negative.
However, Hanwha Investment & Securities viewed that as the Homeplus Co. restructuring continues, the intensity of E-MART's gains will strengthen.
Lee Jin-hyeop, an analyst at Hanwha Investment & Securities, said, "Emergency operating funds (DIP financing) for corporate rehabilitation and the sale of Homeplus Express are underway, but the situation is not easy," adding, "The intensity of restructuring will increase, and the deterioration in sales capability due to a shortage of operating funds will deepen."
Accordingly, the benefit to E-MART is said to strengthen over time. Lee said, "The impact of the extra budget is temporary, but the impact of the Homeplus Co. restructuring is lasting."
For first-quarter E-MART results, it forecast revenue of 7.5 trillion won and operating profit of 172 billion won. Those figures are up 4.3% and 7.9%, respectively, from a year earlier. It estimated operating profit would be in line with the consensus (market average forecast) of 178 billion won. It projected standalone operating profit would come in at 170.4 billion won, up 27.9% from a year earlier.
Lee said, "In the first quarter, same-store sales growth is expected to show a recovery from the slump at the end of last year, with discount stores up 2% year over year and Traders up 4.5%," adding, "Last year, the intensity of promotions was strong across the big-box sector due to E-MART's large-scale event strategy and the impact of Homeplus Co.'s corporate rehabilitation, but this year the sector's promotion intensity appears to have been dialed back."