[Asia Economy Reporter Hwang Yoon-joo] NH Investment & Securities maintained its 'Buy' rating on GS Retail on the 9th, but lowered the target price from 42,000 KRW to 38,000 KRW, considering that initial costs during the transition to digital commerce are significantly higher than expected.
Joo Young-hoon, a researcher at NH Investment & Securities, stated, "With the main business divisions' operating conditions not yet normalized after COVID-19, combined with large-scale losses in the digital commerce sector, we believe that performance momentum will not be significant for the time being."
GS Retail plans to expand its digital commerce transaction volume from 15.5 trillion KRW in 2020 to 25 trillion KRW by 2025. To achieve this, it is investing approximately 550 billion KRW across 13 companies, including the acquisition of Yogiyo.
Researcher Joo analyzed, "The core of the consolidated performance downturn mostly occurred in digital commerce and subsidiaries," adding, "Since the digital commerce transaction volume is at an early stage, around 180 billion KRW annually, it seems inevitable to continue current levels of marketing expenditure for the time being."
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