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E-Mart[139480.KS/BUY]: Wise Strategies To Cope With Regulatory Pressure

Summary

Earnings were modest in 2Q17 but are likely to deteriorate from 3Q due to the slowing growth of same store sales at E-Mart and widening losses at subsidiaries.

We maintain BUY but cut our target price to KRW260,000 as we revise down our EV-EBITDA multiple applied to the company’s business value in light of unfavorable sector fundamentals.

We expect to see a meaningful improvement in consolidated operating profit next year, helped by the company ’s withdrawal from China and narrowing losses at E-Mart 24, Shinsegae Property, and

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.