Wed, Apr 28, 2010 - Page 11 News List

President Chain posts highest-ever first-quarter profit

By Kevin Chen  /  STAFF REPORTER

President Chain Store Corp (統一超商), the nation’s largest convenience-store operator, saw first-quarter net income soar 108.41 percent year-on-year to NT$1.61 billion (US$51.4 million), or NT$1.55 in earnings per share, its highest-ever first-quarter figure, the company said in a statement on Monday.

President Chain runs about 5,000 retail operations on both sides of the Taiwan Strait, including 4,750 7-Eleven stores in Taiwan.

The Taipei-based company attributed the positive first-quarter performance to a strong growth in its core business, which saw an increase of 45.02 percent in operating income to a record high of NT$1.26 billion for the quarter, the statement said.

Contributions from non-core investments, such as coffee chain President Starbucks Coffee Corp (統一星巴克), drugstore and cosmetics chain Cosmed (康是美), online book retailer (博客來) and home furnishings seller MUJI (Taiwan) Corp (無印良品), also helped boost first-quarter profit 145.48 percent from NT$654 million in the previous quarter, the statement said.

“While we were expecting strong results, the numbers still came in as a positive surprise,” Credit Suisse analyst Sidney Yeh (葉昌明) said in a client note yesterday. “Strength was seen in core profit as well as in non-core items.”

President Chain delivered a strong operating margin of 4.7 percent in the first quarter, compared with an average of 3 to 3.5 percent for most companies in the quarter, which should help ease most investors’ concerns about margin erosion, Yeh said.

First-quarter revenue totaled NT$26.89 billion, up 11.39 percent year-on-year, representing the biggest increase since the first quarter of 2007, which the company attributed to “improvement in store quality and adjustment in merchandise structure.”

Sales of fresh food items, for instance, increased by nearly 30 percent year-on-year in the first quarter. Sales of publications and beverages also registered double-digit growth in the quarter, while those of City Cafe coffee surged more than 80 percent from a year ago, the company said.

President Chain’s first-quarter revenue was up 3.81 percent from NT$25.9 billion in the previous quarter and marked the highest quarterly revenue since the third quarter of 2008.

The company said it targeted increasing per-store daily sales and hoped to post another record revenue this quarter as domestic consumption recovers.

Shares of President Chain closed 2 percent higher at NT$86.6 on the Taiwan Stock Exchange yesterday, compared with a 0.14 percent decline on the TAIEX.

Yeh offered a target price of NT$98 for President Chain, citing the company’s strong profit outlook in Taiwan for this year and on-track expansion in China, while Daiwa Securities analyst Yoshihiko Kawashima gave a target price of NT$101 for the stock.

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