BGF Retail recorded poor performance in the first quarter of this year, prompting brokerages to consecutively lower their target prices citing existing store contraction and the convenience store industry entering a low-growth phase. The closing price of BGF Retail on the previous trading day was 112,600 won.
Shinhan Investment & Securities lowered its target price for BGF Retail from the previous 150,000 won to 135,000 won while maintaining a buy recommendation.
Research officer Jo Sang-hoon of Shinhan Investment & Securities noted, "Even the most defensive convenience stores were hit by prolonged consumer recession," and "The forecast for new store openings this year is only 700, which is 76% of the five-year average of about 900, indicating we have entered a low-growth phase."
In the first quarter of this year, BGF Retail's revenue was 2.02 trillion won, a 3.2% increase from the previous year, but its operating profit plummeted by 30.7% to 22.6 billion won. This fell 28% short of the expectations of the securities industry. Unfavorable weather conditions, a lack of business days, and the impact of domestic consumer recession led to a 2.1% decline in existing store growth during the first quarter, and customer numbers also decreased by 3.2%.
On that day, a total of six securities firms, including Shinhan Investment & Securities, Samsung Securities (150,000 → 140,000 won), NH Investment & Securities (150,000 → 140,000 won), Hanwha Investment & Securities (170,000 → 140,000 won), IBK Securities (160,000 → 145,000 won), and DB Securities (130,000 → 110,000 won), lowered the target price for BGF Retail. DB Securities also adjusted its investment opinion from 'buy' to 'neutral.'
Heo Je-na, a researcher at DB Securities, explained, "We are past the worst consumer environment, but there are also insufficient factors to expect recovery," adding, "It is expected that it will take some time for performance recovery and recommends a cautious approach."
There were also opinions that it is important to recover existing store growth rates in the second half and to focus on achieving a 40% shareholder return rate. Baek Jae-sung, a researcher at Samsung Securities, stated, "Considering that there are changes that can lead to stabilization of the domestic business environment, including extra budgets, we expect that the sluggish existing convenience store growth rate will improve slightly in the second half."
He added, "Although the 2028 performance target outlined in the recently announced corporate value enhancement plan is somewhat conservative, we should focus on achieving a 40% shareholder return rate that can be achieved through the company's will."