[Click eStock] BGF Retail, Store Count and Customer Unit Price Up... Under Structural Growth

[Asia Economy Reporter Hwang Yoon-joo] Samsung Securities evaluated BGF Retail on the 4th as structurally growing by encroaching on the supermarket market. The investment opinion 'Buy' and the target price of 245,000 KRW were maintained.

Park Eun-kyung, a researcher at Samsung Securities, stated, "In the third quarter, sales increased by 11.9% to 2.06 trillion KRW, and operating profit rose by 31.7% to 91.5 billion KRW," adding, "This marks four consecutive quarters of over 10% sales growth." The number of visitors also grew by 4.8%. Following the second quarter, the number of visitors increased for two consecutive quarters.

Researcher Park explained, "There were concerns that the increase in the number of visitors would lead to a decline in the average spending per customer, but the average spending per customer grew by 0.2% compared to the previous year," and added, "In addition to the effect of product price increases, the product mix is being upgraded as more consumers try to satisfy their dining-at-home needs at convenience stores."

The number of stores is also estimated to be increasing rapidly. The company raised its annual net store increase target from 800 to 900. Stores in similar industries, such as supermarkets, are being converted into convenience stores.

Researcher Park forecasted, "The 2023 performance estimates are sales of 8.21 trillion KRW (+8%), operating profit of 313.5 billion KRW (+21%), and a high profit growth rate with an operating margin of 3.8%."

She continued, "With a business model resilient to recessions, sales are steadily growing as the number of stores, visitors per store, and average spending per customer all increase together. Profitability is also expected to improve due to the upgrading of the product mix and economies of scale."