[Click eStock] "BGF Retail, Time Needed to Recover Stock Momentum... Target Price Down"

[Asia Economy Reporter Song Hwajeong] Samsung Securities on the 12th downgraded the target price of BGF Retail from 189,000 KRW to 185,000 KRW, anticipating that it will take time for meaningful earnings and stock price momentum recovery. The investment rating was maintained at 'Hold.'

Park Eunkyung, a researcher at Samsung Securities, explained, "Considering the impact of the novel coronavirus (Wuhan pneumonia), we lowered the 2020 earnings per share (EPS) estimate by 2%, and accordingly, the target price was also reduced by 2%."

BGF Retail's fourth-quarter earnings last year met market expectations. BGF Retail recorded sales of 1.5 trillion KRW and operating profit of 44.5 billion KRW in the fourth quarter of last year. These figures represent increases of 4% and 7.5%, respectively, compared to the same period the previous year. Researcher Park analyzed, "As expected, the number of visitors increased due to warm weather, and sales grew mainly in high-margin beverage products, resulting in solid operating profit performance."

Although relatively stable growth is expected, it is believed that time is needed for stock price momentum recovery. Researcher Park stated, "Convenience store sales this year are expected to show relatively stable performance with mid-single-digit growth despite domestic demand weakness," but added, "However, since this growth is judged to be driven by an increase in the number of stores rather than same-store sales growth, it will take time for meaningful earnings and stock price momentum recovery." She further added, "Sales and operating profit in 2020 are expected to grow by 4% each compared to the previous year," and "If sales or same-store sales growth exceed the industry average, we plan to consider changing the investment rating."

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