by Oh Jooyean
Published 20 Apr.2020 07:44(KST)
[Asia Economy Reporter Oh Ju-yeon] KB Securities analyzed on the 20th that despite the short-term performance deterioration of GS Retail due to the novel coronavirus infection (COVID-19), the stock price has fallen sharply, recommending an approach from a buying perspective. Accordingly, the investment opinion is maintained as 'Buy,' and the target price has been lowered by 15% to 45,000 won, reflecting the impact of COVID-19.
According to KB Securities, GS Retail's consolidated sales for the first quarter of this year are expected to be 2.0972 trillion won, a 1% increase compared to the same period last year, and operating profit is expected to be 20 billion won, a 7% decrease. Convenience stores saw a decline in customer traffic in February and March due to COVID-19, with existing store growth rate at -2% and net store increase estimated at 230. Sales and operating profit are expected to increase by 3% and 2% year-on-year, respectively, reaching 1.603 trillion won in sales and 27.3 billion won in operating profit.
Researcher Park Shin-ae explained, "The convenience store sector is expected to normalize sales starting from the third quarter." Park added, "The COVID-19 situation has once again highlighted the sales stability of the convenience store business, and the demand for convenience store startups among self-employed individuals is expected to remain robust."
Parnas Hotel is expected to report poor performance with sales and operating profit decreasing by 58% and 61% year-on-year, respectively, to 28.5 billion won and 5.5 billion won. Researcher Park stated, "The COVID-19 outbreak has a slightly negative impact on the convenience store sector and a significantly negative impact on Parnas Hotel," adding, "Although Parnas Hotel's poor performance is expected to continue until the end of the year, the decline in sales is estimated to narrow somewhat in the second half compared to the first half."