Wed, Mar 26, 2003 page10

• President eyes property sector

  • By Kevin Chen / STAFF REPORTER
  • • 
    • 
    • 

  President Chain Store Corp (統一超商) plans to further expand its business into both property development and department stores, in the belief that these projects will add substantial value to its retail territory.

  Wang Wen-hsin (王文欣), public affairs manager at President Chain yesterday confirmed that the company is bidding on a 50-year BOT (build, operate, transfer) property development project with the Taipei City Government.

  President -- the nation's largest convenience store operator with 3,290 7-Eleven stores -- has also signed a joint-venture with Japan's Takashimaya Co in Taipei's Hsinyi District to build a department store.

  The BOT project, located on the corner of Chunghsiao and Keelung Road, will connect a shopping mall with office buildings via an MRT transportation hub, Wang said. The multiple-use complex project is expected to be completed in 2006 at a cost of NT$8 billion, she said.

  "It's our belief that the Hsinyi District will become the city's future commercial focus," Wang said.

  President Chain initially plans to invest NT$2 billion in the project, and later buy up to a 50 percent stake. Other major shareholders will include Uni-President Group (統一集團) with a 25-percent stake, President International Development Corp (統一國際開發) with a 15 percent stake and Prince Housing Development Corp (太子建設) with 10 percent.

  With total paid-in-capital of NT$1 billion, the under construction President Takashimaya Department Store (統一高島屋百華) is slated to open by the end of this year, Wang said. The company hopes the retail/transport hub next door will provide a steady stream of shoppers to the new department store, she said.

  But investors said they are not convinced of President Chain's claim that the two projects will add substantial value to the company's bottom line. President Chain shares dropped NT$0.2 to NT$42.8 on the TAIEX yesterday, its lowest closing in history.

  "The plans sound risky to me," said Nick Lai (賴以哲), an analyst at InsightPacific.com (月涵投顧) in Taipei.

  Lai said Taiwan's shopping mall business is already quite mature and possibly on the decline.

  "Dutch cash-and-carry wholesaler Makro's recent announcement that it would withdraw from Taiwan due to financial stress was a signal that hypermarkets and shopping malls face serious competition in Taiwan," he said.

  The yet-to-be-completed President Takashimaya will also be facing intense competition from rivals Pacific Sogo Department Store (太平洋崇光百貨) and Shin Kong Mitsukoshi Department Store (新光三越百貨), Lai said.

  Another pundit said that President Chain is a little late arriving on the scene in the Hsinyi district.

  "It already looks saturated for department stores and shopping malls run by competitors that have far greater experience and expertise," said Christopher Smith, an analyst at the Primasia Securities Co.

  Smith also questioned the long-term viability of the BOT location.

  "A sizable portion of traffic will be taken away from this BOT location once the new MRT line next to Taipei 101 opens up," he said.

  But Phina Su (蘇麗妃), a senior manager for retail services at CB Richard Ellis Taiwan Ltd (世邦魏理仕), said she's not concerned that President Chain's retail business experience does not translate well to the department store business.

  "Actually they do have some experience ... the Uni-President Group is currently working on a NT$18 billion shopping mall project in Kaohsiung called the `Dream Mall' (統一夢公園)," Su said.

  Su said President Chain's two new projects in the Hsinyi district have a good chance of surviving as they are expected to draw consumers from various locations around the city.

  “When Warner Village started its business several years ago in Taipei,

  nobody believed it would be so successful. But in the first two years alone

  it attracted nearly 30 percent of the Taipei movie-going audience.”

  Both Lai and Smith expressed negative sentiments about President Chain's new

  investments, saying the company's lack of a catalyst in China and expansion

  into non-core areas brings up growing concerns over its long-term growth

  prospects.

  The company's ambitions to grow in China were dealt somewhat of a blow by

  7-Eleven Inc of the US, which gave the Taiwanese company only a 14-percent

  stake in a joint-venture company to open 500 stores in Beijing by 2008,

  company president Hsu Chung-jen (徐重仁) said in January.
• Most Popular

  • 1

    Bologna advance to face AC Milan in Coppa final

  • 2

    Bukele proposes prisoner swap with Maduro

  • 3

    Wild’s top line too much for Vegas Golden Knights

  • 4

    Taiwan draws attention at World Expo

  • 5

    China turns on the charm for Taiwan businesses: study