Korea Investment & Securities analyzed on the 1st that the stock price recovery of BGF Retail will be slow due to the unfavorable industry environment. The target price has been lowered from the previous 165,000 won to 140,000 won, and the investment opinion remains "buy."
Kim Myung-ju, a Research Institute of Korea Investment & Securities, noted, "Considering the significantly slow increase in store numbers within the convenience store industry and the potential recovery of competitiveness in other retail channels, it appears difficult to restore market share for convenience store channels this year."
Korea Investment & Securities estimates BGF Retail's first-quarter sales of 2.0241 trillion won, a 3.6% increase compared to the same period last year, and operating profit of 29.4 billion won, a 9.9% decrease during the same period. These figures fall short of market expectations by 2% and 173%, respectively.
Kim said, "February of this year was much colder than normal, and there was one less business day compared to February last year," adding, "Due to the unfavorable weather, sales of high-margin products like beverages were likely sluggish."
He continued, "With the sluggish growth of existing stores and the slow increase in new stores, the market share of convenience store channels within the retail industry is expected to slightly decline to 5.8% in the first quarter, compared to 5.9% in the first quarter of last year," and noted, "The number of stores for the three convenience store companies in February increased by 0.9% compared to the same period last year, which is the lowest level ever recorded."