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Mon, Oct 29, 2007 - Page 11 News List

FEATURE: Uni-President celebrates 40th anniversary

ON EVERY CORNER The nation's largest food conglomerate and parent company of the ubiquitous 7-Eleven convenience stores is poised to list on the Hong Kong market

By Joyce Huang  /  STAFF REPORTER

Uni-President Enterprise Co chairman Kao Ching-yuan, second right, looks at a model of the Dream Mall shopping center in Kaohsiung on Nov. 5, 2003.


Shrugging off the post-SARS slowdown and competition, the four-decade-old Uni-President Enterprise Co (統一企業), the nation's largest food conglomerate, is poised for fast expansion and sales growth should its plan to list on the Hong Kong market go through soon, market watchers say.

"We estimate that [parent] Uni-President Group (統一集團) will see annual revenue growth of 30 percent for the next three years," said Joy Tsai (蔡秋洵), an analyst with Yuanta Core Pacific Capital Management (元大京華投顧).

If Tsai's bullish prediction comes true, Uni-President Group, whose combined revenues reached NT$258 billion (US$7.93 billion) last year, will soon outperform top-tier Japanese competitors, whose annual revenues average above NT$400 billion.

Speaking at the company's 40th anniversary last week, president Alex Lo (羅智先) -- the son-in-law of group co-founder and chairman Kao Ching-yuan (高清愿) -- has vowed to become the market leader in Asia in the next decade while Kao himself, in the early 1990s, had aimed even higher with the goal of expanding the group to become the world's largest food conglomerate with US$120 billion in annual revenues by 2017.

Although Lo refused to clarify the company's recent progress on the Hong Kong listing plan, Uni-President's growing ambition to take up sizable shares in Chinese markets is evident after setting up a Cayman-based holding company with a goal of raising US$150 million in Hong Kong by year's end for loan repayment and re-investment in China.

Moreover, the company's board in June further decided to increase its capital from the current NT$33.5 billion to NT$48 billion in preparation for future China-bound investments -- a decision that goes against the market trend when most Taiwanese companies were buying back shares to strengthen their earnings per share (EPS).

The recapitalization plan will allow Uni-President, which is constrained by the government's 40 percent cap on China-bound investment, to increase its bets in China by a maximum of NT$580 million after having invested US$350 million in China since 1992, which is nearing the 40 percent ceiling of its capital.

The market has mixed views toward Uni-President's recapitalization move, which will end up diluting its current EPS to hurt shareholders' substantial return.

"But we are still positive because we believe Uni-President will take advantage of the extra capital to create future value for shareholders in compensation for the near-term EPS dilution," says Tsai, expressing confidence in Uni-President's future growth in China.

For example, the group won a sponsorship spot for Beijing's Olympic Games next year, which would bring more exposure to Chinese consumers and soon catch the group up with Taiwanese competitor Ting Hsin International Corp (頂新集團) in instant noodle sales, she says.

"As a famous fast-noodle brand, Uni-President's participation in the 2008 Olympic Games has helped strengthen the game's sponsorship," the Beijing Organizing Committee for the 2008 Olympic Games' (BOCOG) vice president and secretary-general Wang Wei (王偉) said last November.

Taipei-based China Credit Information Service Ltd's (中華徵信所) editor-in-chief Liu Jen (劉任) is just as optimistic, saying that Uni-President has leaped from a China concept stock to a China-gain stock after the group's revenues in China exceeded those from Taiwan.

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