[Click eStock] "GS Retail Shows Remarkable Stability"

NH Investment & Securities Presents 'Buy' Investment Opinion and Target Price of 49,000 Won... Closing Price on the 5th Was 40,800 Won

[Asia Economy Reporter Kum Boryeong] An analysis highlighted the stability of GS Retail.

According to NH Investment & Securities on the 6th, GS Retail recorded consolidated sales of 2.2408 trillion KRW and operating profit of 49.9 billion KRW in the fourth quarter of last year. These figures represent increases of 3% and 97% respectively compared to the previous year, exceeding consensus estimates by 40%.

Lee Ji-young, a researcher at NH Investment & Securities, stated, "The main cause of the earnings surprise was the reversal of lease accounting in the convenience store division. The convenience store division posted strong results with sales of 1.7237 trillion KRW and operating profit of 53 billion KRW, growing 5% and 74% respectively compared to the previous year. Although the exact amount is unknown, these figures include one-time gains related to lease accounting," adding, "However, even excluding this, the net increase in stores was very solid at 300 to 400 locations, and improvements in purchase rates appear to have contributed to an increase in gross profit margin."

The convenience store division is also expected to be less affected by the novel coronavirus (Wuhan pneumonia). The researcher explained, "Although there has been a decrease in customer numbers due to the COVID-19 situation, the average spending per customer has increased, so the negative impact is expected to be less severe compared to other industries. GS Retail’s convenience stores stand out for their high daily sales and franchise conditions favorable to store owners, leading to a notably fast pace of new store openings recently, so good performance is expected this year as well," and added, "A reduction in losses in other divisions is also anticipated, as most underperforming H&B stores have been closed and losses related to subway Line 6 and 7 store contracts ending have significantly decreased. Although there are cost burdens due to the renewal of the Grand Intercontinental Hotel, improvements in profitability in other divisions should more than offset this. It is a stock that stands out for its stability in an unstable market."

NH Investment & Securities gave GS Retail a 'Buy' rating with a target price of 49,000 KRW. The closing price on the 5th was 40,800 KRW.

This content was produced with the assistance of AI translation services.