[Click eStock] "BGF Retail, Strong Q4 Earnings Expected... Stock Price Likely to Continue Upward Trend"

[Asia Economy Reporter Park Jihwan] KB Securities stated on the 20th that BGF Retail is expected to deliver strong performance in the fourth quarter of last year, based on its outstanding product development capabilities. The investment opinion 'Buy' is maintained, but the target price was slightly lowered by 5% to 210,000 KRW.

Park Shinae, a researcher at KB Securities, emphasized, "The upward trend of the stock price is expected to continue, with expectations for strong fourth-quarter results last year and an improvement in the business environment in 2022." She added, "Thanks to the rapid product development capabilities that align with changing consumption trends such as increased demand for home dining and the home drinking culture, BGF Retail is demonstrating superior sales growth compared to competitors." In particular, the current stock price is evaluated to have a valuation burden eased compared to the past, with a price-to-earnings ratio (PER) at around 15 times. It is expected that the upward trend of the stock price will continue.

In 2022, expectations for customer recovery due to the normalization of daily life remain valid. Unlike discount stores or department stores that benefited from COVID-19, convenience stores are still channels experiencing losses, but recovery is expected as daily life gradually returns to normal. Although the outbreak of Omicron temporarily weakened expectations for 'With Corona,' it is analyzed that overall customer recovery can be expected once school attendance and commuting fully normalize and restrictions on gathering size and time are lifted. Additionally, with recent increases in processed food prices, there is potential for profitability improvement.

Sales in the fourth quarter of last year are expected to reach 1.7134 trillion KRW, and operating profit is expected to increase by 10% and 35%, respectively, to 48.1 billion KRW. Researcher Park Shinae stated, "Although social distancing continued, sales at special location travel destinations, strong sales of alcoholic beverages and side dishes, and favorable weather are expected to result in a high same-store sales growth rate of 3%." Due to the fixed cost reduction effect from steady sales flow, the operating profit margin is expected to improve by 0.5 percentage points. This year, consolidated sales are projected at 7.1666 trillion KRW, and operating profit at 230.2 billion KRW, representing increases of 6% and 16% year-on-year, respectively.