by Cha Minyoung
Published 07 Jun.2024 07:57(KST)
On the 7th, IBK Investment & Securities maintained a target price of 33,000 KRW and a 'Buy' rating for GS Retail, expecting an increase in corporate value due to the spin-off.
Earlier, GS Retail announced a spin-off on the 3rd. The non-distribution business divisions, including the hotel division and the food ingredient division, will be spun off to establish an intermediate holding company. Upon the spin-off, the existing company GS Retail and the newly established company Parnas Holdings (tentative name) will be separated and re-listed, with the spin-off ratio being 81% and 19%, respectively. The company also expressed its intention to cancel 1.2% of its treasury shares (approximately 1.28 million shares).
Researcher Nam Seong-hyun stated, "We are focusing on the potential increase in corporate value due to the spin-off and the business strategy of the new company. First, the value of the hotel division, which had been derated, is likely to be reflected. Second, the new company is expected to have downside rigidity in corporate value due to stable dividend payments."
He added, "Third, efficiency is expected from the reorganization of business divisions. Also, we believe attention should be paid to the future growth potential of the new company, as there is a high possibility of structural growth in existing businesses due to supply shortages, diversification of the business portfolio through new business initiatives, and business synergy possibilities linked with group companies."
He continued, "The most notable aspect of the company's spin-off is the growth potential of the Parnas division. Since the business structure, which had been limited to leasing and hotel operations, is likely to expand through synergies with retail operations and the hotel division, an increase in corporate value is expected in the future."
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