[Click e-Stock] "BGF, Earnings Momentum Slows... Shareholder Returns Expected to Expand"

Heungkuk Securities stated on May 23 that "BGF's earnings momentum is expected to remain somewhat weak this year as well," adding that "active efforts are needed to enhance shareholder value."

Park Jongryul, a researcher at Heungkuk Securities, analyzed, "In the first quarter, BGF reported consolidated sales of 105.9 billion won and operating profit of 5.2 billion won, representing a 9.2% increase and a 41.6% decrease year-on-year, respectively, significantly falling short of market expectations." He explained, "The relatively large increase in sales was due to increased revenue from the consolidated subsidiary BGF Eco Materials, following the acquisition and consolidation of Daewon Chemical." He further added, "Despite the strong top-line growth, operating profit declined due to a decrease in both the standalone segment and equity method gains, as well as a drop in operating profit at BGF Eco Materials."

Alongside this, the annual earnings forecast for this year was also revised downward, with annual sales now projected at 444.2 billion won and operating profit at 49.9 billion won, both lowered from previous estimates. Park analyzed, "As the profit contributions from BGF Retail and BGF Eco Materials fall short of expectations, and with the convenience store business underperforming, a decline in standalone income (dividends, royalties, rental income) will be inevitable."

However, the recommendation was maintained at 'Buy,' and the target price was raised to 4,700 won. He explained, "This reflects the increase in net cash and a narrowing of the discount to net asset value (NAV)." He emphasized, "It is time for the company to demonstrate a proactive approach to enhancing corporate and shareholder value through a value-up program."