[Click eStock] "BGF Retail, Strong Q2 and Better Q3 Ahead"

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[Asia Economy Reporter Song Hwajeong] KB Securities on the 6th raised the target price for BGF Retail from 200,000 KRW to 210,000 KRW, expecting the company’s performance to improve further in the third quarter following solid results in the second quarter of this year. The investment rating was maintained at 'Buy.'

BGF Retail’s second-quarter results met market expectations (consensus). On a consolidated basis, second-quarter sales increased by 10% year-on-year to 1.7005 trillion KRW, and operating profit rose by 32% to 58.7 billion KRW. Shin-ae Park, a researcher at KB Securities, analyzed, "The same-store sales growth rate was 2% (general products 4.4%, tobacco -1.3%), and excluding the accounting impact on lottery sales, it was about 2.4%. Despite a 4% decline in tobacco sales in May due to the disaster relief fund payment in the same month last year, the company showed solid growth." The convenience store division’s operating profit margin improved by 0.4 percentage points to 3.3%. Park explained, "The gross profit margin improved by 0.5 percentage points due to high growth in sales of alcoholic beverages, side dishes, and room-temperature instant meals, while the selling and administrative expense ratio remained at the same level as the previous year."

KB Securities forecasts BGF Retail’s consolidated sales for this year to increase by 9% year-on-year to 6.7074 trillion KRW, and operating profit to rise by 22% to 197 billion KRW. Researcher Park said, "In the first half of the year, the company demonstrated product development capabilities by launching items such as 'Gompyo Beer' and 'Rich-Rich Triangle Kimbap.' In the second half, it plans to attract bulk purchase customers and increase average spending per customer by strengthening the 'N+N Promotion.' With steady demand for convenience store startups, which show sales stability, BGF Retail has an aggressive expansion plan of 1,000 new stores this year, a 7% increase compared to last year."

Concerns over the Delta variant and profit-taking desires caused BGF Retail’s stock price to fall by 11% over the past two months. Researcher Park stated, "The recent social distancing level 4 measures are expected to have a limited negative impact on performance due to learning effects. The third quarter is a seasonal peak period, with additional benefits from the Olympics and rising vaccination rates expected." She recommended a buying approach in anticipation of a stock price rebound.

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