[Click eStock] "GS Retail, Competing with Quick Commerce... Need to Examine Structural Changes"

SK Securities Report
Target Price 40,000 KRW

[Asia Economy Reporter Minji Lee] On the 4th, SK Securities initiated coverage on GS Retail with a buy rating and a target price of 40,000 KRW. While growth in the convenience store market is expected next year, they forecast that structural changes should be closely monitored due to the emergence of quick commerce and competition in commercial districts.

Baedal Minjok launched the B Mart service last November, delivering bottled water, ramen, snacks, and HMR within 30 minutes. Delivery Hero, which is pursuing a corporate merger, also introduced a quick commerce service called Yogmart in September. Their services fundamentally involve setting up small-scale logistics warehouses throughout urban areas and delivering to nearby neighborhoods.

It is believed that quick commerce companies are receiving the same structural benefits that convenience stores enjoyed in the past due to the increase in single-person households. Yogiyo initially tried to onboard convenience stores, including GS Retail, onto its platform but ended up operating Yogmart directly, leading to cannibalization with the convenience stores that had joined.

Seungwoo Yoo, a researcher at SK Securities, explained, “Although large-scale damage to convenience stores caused by quick commerce has not yet become visible, a gradual shift in perspective is needed for convenience stores, which were previously considered channels free from competition with e-commerce among traditional retail channels.”

GS Retail’s performance next year is estimated to record sales of 9.123 trillion KRW and operating profit of 281 billion KRW, growing 22% and 6.7% respectively compared to this year. Researcher Yoo said, “Next year, the growth of convenience stores, which was affected by the decrease in foot traffic due to COVID-19, will accelerate. At the same time, with the completion of the Grand Intercontinental renovation and its reopening in December, hotel performance is expected to improve from the fourth quarter.”

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