Heungkuk Securities analyzed on the 18th that GS Retail shows no clear potential for stock price increase along with poor performance, noting the need for communication with the market through participation in a corporate value enhancement program. The firm has lowered its target price from 20,000 won to 18,000 won while maintaining a 'buy' investment opinion. The closing price for GS Retail on the previous trading day was 14,210 won.
Heungkuk Securities expects that GS Retail's consolidated sales in the first quarter of this year will increase by 3.4% year-on-year to 2.8 trillion won, while operating profit is projected to decrease by 1.9% year-on-year to 487 million won.
The operating profit of the convenience store and supermarket institutional sectors is expected to show relatively sturdy growth, yet losses continued in the home shopping sector and other areas including development and common sectors. Park Jong-ryeol, a researcher at Heungkuk Securities, explained, "Despite the increased depreciation and advertising expenses due to the growth in operating locations, there will be slight operating profit gains in convenience stores and supermarkets, while home shopping is expected to see a decrease in operating profit due to reduced acquisition amounts."
However, it is unavoidable that operating losses in the common and other institutional sectors will continue due to the suspension of revenue recognition from development sites and the reflection of impairment losses from some programs, alongside reduced subsidiary profits.
However, the annual performance is expected to be relatively good. Heungkuk Securities projected GS Retail's annual consolidated sales and operating profit at 11.9 trillion won and 2.878 billion won, respectively. This marks an increase of 2.6% and 20.5% compared to the previous year. Researcher Park noted, "Despite the overall deterioration in the consumption environment, the relatively defensive nature of the convenience store and supermarket channels is expected to maintain stable market trends this year, although it will be challenging to expect significant profitability improvements in existing businesses, and the reduction of operating losses in other areas will be crucial."
Researcher Park emphasized that it is a time when value-up disclosure is needed. He stated, "There is a need to communicate with the stock market through more specific disclosures regarding the company's future growth potential and various efforts to enhance shareholder value, as soon as possible."