April 24, 2024

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[THE INVESTOR] BGF Retail will recover despite minimum wage hike on the back of stable store-opening rate and growing demand for home meal replacements, said Korea Investment and Securities on Sept. 6, maintaining a “buy” recommendation and 240,000 won (US$214.27) target price.

Its operating profit in the second quarter fell 19.7 percent on-year to 56.4 billion won. Although revenue from same stores grew over 2 percent, it has earmarked 45 billion won to subsidize for minimum wage hike. Revenue from existing convenience stores will rebound, though, as up to 800 branches are opening every year and demands continue to grow for home meal replacements. The financial backing to offset wage hike will not increase despite 10.9 percent rise next year, said analyst Heo Na-rae.

Meanwhile, operating three cashier-less stores with S1 as partner is a positive. It is a pioneering effort to secure profits for storeowners and expansion of the unmanned system will garner more profits, forecast the analyst. 

By Hwang You-mee (glamazon@heraldcorp.com)