[Click eStock] "BGF Retail, 2Q Results Meet Expectations... Further Competitiveness Building"

On the 4th, IBK Investment & Securities maintained its buy rating and target price of 250,000 KRW for BGF Retail, citing expectations for the expansion of BGF Food's production line in the second half of this year.

In the second quarter, BGF Retail reported consolidated sales of 2.0982 trillion KRW, up 9.4% year-on-year, and operating profit of 78.1 billion KRW, an increase of 10.3%.

Nam Seong-hyun, a researcher at IBK Investment & Securities, stated, "We view the second-quarter results positively as both existing store growth and new store openings occurred simultaneously, and considering unfavorable conditions such as rainfall, the results are not bad," adding, "This is because of continued improvement in sell-through rates due to better performance of key subsidiaries and product mix effects."

The product mix effect accelerated further in the second quarter. Food improved by 0.9 percentage points year-on-year, processed foods by 0.7 percentage points, while tobacco relatively decreased by 1.3 percentage points.

BGF Retail plans to expand BGF Food's production facilities in the second half of the year. This is regarded as a positive strategy as it is expected to increase the number of differentiated SKUs that can enhance customer attraction and secure distinctive competitiveness. Additionally, it will enable an increase in margin per store due to product mix effects and growth in the performance of key subsidiaries.

Researcher Nam said, "BGF Retail is recording results ahead of competitors through differentiated product supply and expansion of stores in prime locations," and added, "The differentiation of product groups is being carried out through subsidiaries, and the effects are becoming apparent."

He continued, "Given that they have already expanded meal kits and desserts, the plan to further expand SKUs through additional facility investments is positive," adding, "This should be interpreted meaningfully as it secures fundamental competitiveness."