GS Retail, Direction after merger with GS Home Shopping is important(Eugene Investment & Securities)

[Infostock Daily= Reporter An Hoe Hyun] Eugene Investment & Securities analyzed on the 21st that GS Retail can be revalued if it presents a specific strategy that can create synergy after the merger with GS Home Shopping. As a result, the investment opinion 'Buy' and target price of 48,000 won remained.

GS Retail's sales and operating profit for the fourth quarter of last year are expected to be 2.2227 trillion won and 28.8 billion won, respectively. Analysts say that the re-proliferation of COVID-19 is likely to negatively affect major business sectors and fall short of the market consensus.

"The operating profit of convenience stores is estimated at 33.4 billion won," the company predicted, adding, "The growth rate of existing stores has been sluggish than expected since mid-November in the aftermath of COVID-19. As the net increase in stores is taking place as planned, the performance of convenience stores will improve from March when sales recovery will begin in earnest."

Among the non-convenience store sectors, the supermarket's operating profit is estimated to be 3.2 billion won, turning into a surplus compared to the previous year. On the other hand, the hotel sector saw increased uncertainty.

"Grand InterContinental resumed operations 11 months after the renovation, but a ban on private gatherings for five or more people and a 50% limit on room reservations are implemented, and the accommodation rate is not qualitative," the company explained.

GS Retail decided to merge with GS Home Shopping in July. The merger ratio is ‘1 to 4.22’ for common shares of GS Retail and GS Home Shopping, and will issue 4.22 shares of Retail per share of GS Home Shopping. If you oppose the merger, the stock purchase claim price is 34,125 won for GS Retail and 138,855 won for GS Home Shopping.

Reporter An Hoe Hyun ahh@infostock.co.kr