[Click eStock] "BGF Retail Enters Operating Profit Growth Cycle"

[Asia Economy Reporter Eunmo Koo] An analysis suggests that BGF Retail has entered a cycle of operating profit growth.

Eugene Investment & Securities forecasted BGF Retail's 2021 sales to grow by 6.3% from this year to 6.6 trillion KRW, and operating profit to increase by 23.8% to approximately 216.9 billion KRW. On the 19th, analyst Younghoon Joo of Eugene Investment & Securities stated in a report, “Starting from the upcoming fourth quarter, the downward trend in operating profit that continued for three consecutive quarters is expected to end,” adding, “Although the impact related to COVID-19 still needs to be cautiously observed, since the performance base was very low, the visibility of a rebound from now on is much higher.”

BGF Retail’s third-quarter sales reached 1.6828 trillion KRW, a 6.3% increase compared to the same period last year, while operating profit was 63.7 billion KRW, a 1.7% decrease, slightly surpassing market consensus. Analyst Joo explained, “Although the business environment cannot yet be considered fully normalized, it has significantly improved compared to the first half of the year.”

The quarterly same-store sales growth rate recorded was -1.6%. Analyst Joo noted, “The demand for duty-free cigarettes shifted to convenience stores, increasing the cigarette composition ratio, but the product GPM was maintained at last year’s level, which is positive,” explaining, “This was because sales of relatively high-margin product categories performed well.” Furthermore, he added, “Special location stores, which were the main cause of poor performance in the first half, are still not in a good situation, but the effect of reduced store rent has been reflected, leading to improvements in profitability.”

The investment opinion and target stock price were maintained at ‘Buy’ and 180,000 KRW, respectively. Analyst Joo evaluated, “The convenience store industry was one of the distribution channels most affected by COVID-19,” but added, “However, since there is a high possibility of performance rebound starting from the fourth quarter, the stock price is also likely to respond positively.”

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