GS Retail Co Ltd: Risk Reward Update

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GS Retail Co Ltd: Risk Reward Update

UpdateM

RiskRisk RewardReward– GS Retail- GSCo LtdRetail(007070.KS)Co Ltd (007070.KS)

Slowing CVS sales to limit earnings growth

PRICE TARGET W21,500 UNDERWEIGHT THESIS

Base-case scenario value, derived from a residual income model. Our key assumptions are a ▪After the corporate structure change, we

cost of equity of 8.8% (4% risk-free rate, 6% equity risk premium and 0.80 beta) and a think the company needs to improve the

terminal growth rate of 3%. Our intrinsic value implies a NTM P/E of 10x, lower than the efficiency and profitability of its core

average of 12x over the past five years, in view of lower earnings visibility and slower CVS business (CVS). Sustained earnings and

growth outlook. margin improvement could be needed to

support the underlying growth story. W25,407 ▪The store expansion effect has dissipatedConsensus Price Target Distribution W18,000.00 W33,000.00 (flattish YoY growth for store numbers) MS PT

from 2025, hence SSSG and cost controlSource: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

become critical for CVS earnings.

▪Current valuation is sitting at 2026 P/E

12x, similar to five-year historical average.

RISK REWARD CHART Considering slowing top-line growth in the

CVS channel, we see limited upside to

valuation.

KRW

W29,000W29,000(+2.11%)W29,000(+2.11%)(+2.11%) Consensus Rating Distribution

W28,400W28,400W28,400 72% Overweight

22% Equal-weight

24000 6% Underweight

W21,500W21,500(-24.30%)W21,500(-24.30%)(-24.30%)

MS Rating

16000 Source: Refinitiv, Morgan Stanley Research

W17,000W17,000(-40.14%)W17,000(-40.14%)(-40.14%)

8000 Risk Reward Themes

Contrarian: Negative

View descriptions of Risk Rewards Themes here

MAY '25 NOV '25 MAY '26 MAY '27