President Chain Store Corp (PCSC, 統一超商), the nation’s largest convenience store operator, plans to open its first 7-Eleven store in Shanghai before the end of the year after it won the right to expand there.
President Chain has been authorized by Seven Eleven China (SEC, 柒一拾壹商業) to operate 7-Eleven stores in Shanghai and signed a memorandum of understanding with SEC, the Taiwanese firm said in a statement to the Taiwan Stock Exchange yesterday.
Lillian Lin (林立莉), public relations manager at President Chain Store, declined to reveal details of the deal, such as royalty payments, expansion schedule and capital expenditure. But the Shanghai investment will be 100 percent-owned by President Chain, Lin said in a telephone interview.
Shares of President Chain soared limit-up to close at NT$115.5 on the Taiwan Stock Exchange yesterday.
A Citigroup analyst, however, had doubts the stock would continue to rise.
“The deal was long awaited and should help PCSC’s operation in China in the long-run. However, considering the late entry and the competitive nature of the convenience store market in Shanghai, we doubt this new investment can break even in three years, if not longer, so we see little earnings upside for PCSC and Uni-President Enterprise Co (統一企業),” Andre Chang (張致竑), an analyst at Citigroup Investment Research in Taipei, wrote in a client note yesterday.
President Chain has a total of 4,790 7-Eleven convenience stores in Taiwan. It already has eight brands in China, with a total of 281 outlets.
Lin said the company was confident about its Shanghai plans as it has nearly 10 years of logistical experience in China because it opened its first Starbucks Coffee Co shop in Shanghai in 2000.
“People in Shanghai have a relatively high level of acceptance in terms of new products and services, as long as they meet local needs,” Lin said.
ADDITIONAL REPORTING BY KEVIN CHEN