Heungkuk Metaltech Securities said on the 19th that profitability is strengthening at BGF Retail as high-efficiency stores increase. It kept its "buy (BUY)" rating and raised its target price to 176,000 won. BGF Retail's previous trading day closing price was 139,400 won, leaving 26.3% upside potential.
Earlier, BGF Retail said that on a consolidation basis in the fourth quarter of last year, revenue was 2.3 trillion won and operating profit was 64.2 billion won. Those figures rose 3.4% and 24.4%, respectively, from a year earlier.
Park Jong-ryeol of Heungkuk Metaltech Securities said, "Stable top-line growth was achieved through openings of high-quality new stores, expansion of mid-to-large stores, and improved growth rates at existing stores," and noted, "In particular, operating profit beat expectations thanks to an improved product mix, reduced SG&A burden, and better results at subsidiaries."
This year, BGF Retail's results are expected to rise 3.2% and 5.5% year over year, with revenue of 9.3 trillion won and operating profit of 267.8 billion won.
Park said, "As the convenience store market enters a saturation phase, the focus is shifting from simply increasing the number of stores to improving store fundamentals," adding, "A virtuous cycle centered on high-quality and mid-to-large stores, stronger differentiated products, and increased sales of related products due to more foreign visitors in winter are positive factors."
In addition, BGF Retail disclosed on Apr. 30 last year through its plan to enhance corporate value that it is targeting a 40% shareholder return rate. Park projected, "If stronger earnings momentum coincides with expanded shareholder returns, a re-rating of the share price could continue."