[Click eStock] "BGF Retail, 24 Hours Not Enough as Social Distancing Eases"

[Asia Economy Reporter Kwon Jaehee] Eugene Investment & Securities on the 26th newly issued a 'Buy' investment opinion and a target price of 250,000 KRW for BGF Retail.

With the transition to a COVID-19 endemic and the easing of social distancing, the convenience store industry is in a clear recovery phase. Convenience store sales growth rate increased by 11.5% year-on-year as of March, and sales per store rose by 4.9%. Despite a high base of 10.7% sales growth in March last year, the level remains favorable. Especially, with the significant easing of social distancing restrictions from April, a full-scale improvement in the convenience store business is expected. The resumption of school attendance, commuting, outings, and travel is anticipated to increase foot traffic, leading to a recovery in customer numbers. In particular, convenience stores located in special locations such as airports and performance venues are expected to have both higher sales and profit margins. Additionally, inflation has led to an increase in per capita purchase amount due to rising product prices, confirming an increase in convenience store basket size. The sales per store growth rate turned positive year-on-year starting from September 2021.

BGF Retail's total sales this year are estimated at 738.4 billion KRW, and operating profit at 259 billion KRW, representing increases of 8.9% and 29.9% respectively compared to the previous year. The company aims for a net increase of 800 stores this year.

Researcher Lee Haeni of Eugene Investment & Securities analyzed, "With reopening, sales growth and profitability improvement are expected in convenience stores located in special locations such as performance venues and airports," adding, "Although special location stores account for 10% of the total, both sales and profitability are higher compared to regular stores."

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