[Click e-Stock] "BGF Retail Expected to Benefit from Leverage Effect as Industry Recovers... Target Price Raised"

Target Price Raised from 145,000 Won to 158,000 Won

On April 15, LS Securities raised its target price for BGF Retail from 145,000 won to 158,000 won, citing the potential for a leverage effect should the industry recover. The investment opinion remains 'Buy'.

Researcher Orina Oh of LS Securities explained, "Currently, BGF Retail's stock is trading at a price-to-earnings ratio (PER) of 9.3 times. Given the potential for structural industry improvement and a possible tobacco price increase, there is also heightened valuation attractiveness at this stage."

The convenience store sector is undergoing accelerated structural reorganization, centered around the top two companies. Oh noted, "As competition for new store openings slows, the environment is now favorable for focusing on improving efficiency at existing stores and strengthening internal stability, rather than simply expanding the number of outlets. If we also consider the possibility of a tobacco price increase in the future, the earnings momentum for the convenience store industry is expected to strengthen further. In particular, BGF Retail has consistently maintained a certain level of net store increase, so the leverage effect will be maximized when the industry recovers," she analyzed.

BGF Retail's first-quarter results this year are expected to be in line with market expectations. Oh stated, "BGF Retail's consolidated sales for the first quarter are expected to reach 2.078 trillion won, up 3% from the same period last year, and operating profit is projected to rise 21.6% to 27.5 billion won, in line with the consensus (the average of securities firms' forecasts). It appears that the sharp increase in sales of volume-based garbage bags in March was partially reflected. Both customer traffic and average basket size seem to have entered a gradual recovery trend, and the ongoing stabilization of costs is a positive development," she said.

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