Shares of BGF Retail (282330.KS), operator of the CU convenience store chain, fell nearly 5% after a string of share sales by the founding family of BGF Group Chairman Hong Suk-jo. Related parties including the chairman's brothers and a niece have sold about 1 million shares so far this year, with some liquidating their entire holdings.
BGF Retail traded at 136,800 won, down 4.67% from the previous session, as of 3:09 p.m. on the 18th, according to the Korea Exchange.
Market participants attributed the day's decline to larger-than-expected selling by the owner family. Hong Suk-joon, chairman of Bokwang Venture Capital, his eldest daughter Hong Seung-yeon, and Hong Seok-hyun, chairman of JoongAng Holdings, and his wife sold a combined 998,580 BGF Retail shares on the open market this year, equal to 5.8% of shares outstanding. Hong Suk-joon and his daughter disposed of their entire stakes, and the largest shareholder group's holding fell to the 45% range from above 50% at the start of the year.
Because the family's final sales were concentrated near the stock's peak, some in the market see the moves as profit-taking at high prices. The sales by Hong Seok-hyun and his wife, however, are viewed as a separate matter tied to liquidity issues at JoongAng Group.
Setting aside the supply-and-demand issue, brokerages say BGF Retail's fundamentals are in fact improving. Heungkuk Securities raised its target price to 200,000 won in a report on the 15th. "The company will continue to post solid operating results in the second half, benefiting from structural changes in the consumption environment driven by the rise in one- and two-person households, as well as increased spending by foreign visitors to Korea," said Park Jong-ryeol, an analyst at Heungkuk Securities. "We expect a healthy third quarter, with consolidated revenue of 2.6 trillion won and operating profit of 108 billion won."
BGF Retail's second-quarter consolidated operating profit rose 22.3% from a year earlier to 84.9 billion won, beating market estimates, and first-half operating profit climbed 33.7% to 123 billion won. Analysts say earnings quality is improving as the share of low-margin sales declines and high-margin product sales grow. Heungkuk projects full-year consolidated revenue of 9.5 trillion won and operating profit of 306.7 billion won.
