[Click eStock] "GS Retail, Continued Convenience Store Operating Profit Growth Positive"

Korea Investment & Securities diagnosed on the 7th that the continuous increase in convenience store operating profit of GS Retail is positive. They maintained a 'Buy' investment rating and a target price of 35,000 KRW.

GS Retail's consolidated sales for the fourth quarter of last year increased by 2.9% year-on-year to 2.9317 trillion KRW, and operating profit for the same period decreased by 13.7% to 91.4 billion KRW, meeting market expectations. Myungjoo Kim, a researcher at Korea Investment & Securities, analyzed, "The operating profit of the convenience store division being better than market expectations is positive," adding, "This is due to cost reduction effects continuing since the third quarter of last year, and partly due to a decrease in the proportion of headquarters-leased stores, which have higher fixed costs than franchisee-leased stores."

Researcher Kim judged that the convenience store business is currently in a turnaround phase. He said, "GS Retail recorded a net increase of 942 stores last year and plans to continue a net increase of more than 800 stores this year," adding, "It is estimated that lower-tier operators without sufficient financial strength have recently been unable to aggressively open stores."

He added, "The restructuring of the convenience store market is progressing rapidly, which is positive for the leading operator GS Retail."