Simple Mart Retail Co (三商家購), which operates supermarket chain Simple Mart (美廉社), is to start trading of its shares on the Emerging Stock Board today, according to the Taipei Exchange, the bourse for small and medium-sized capitalization companies.
Simple Mart Retail, founded in 2006, had 661 Simple Mart stores as of Nov. 30, second only to PX Mart Co’s (全聯實業) 951 Pxmart (全聯福利中心) outlets. Simple Mart Retail also runs other retail sub-brands, including Damei Discount Mart (大美折扣超市) and Simple City Mart (美廉城超).
The listing comes after its parent company, Mercuries & Associates Holding Ltd (三商投資控股), earlier this year sold a 22 percent stake in Simple Mart Retail to Sumitomo Corp, making the Tokyo-based trading house a strategic investor in the Taiwanese retailer.
In a research note published on Thursday last week, Yuanta Securities Investment Consulting Co (元大投顧) analyst Juliette Liu (劉珮昀) said Simple Mart is a fast-growing supermarket chain with improving profitability.
“It posted per-store daily sales of NT$45,000 to NT$50,000 [US$1,458 to US$1,620] with stable single-store sales (SSS) growth of about 1 percent over each of the past five years, driven by its product mix and pricing strategy,” Liu said. “Its price advantages allow it to compete with hypermarkets, but at locations easily accessible to customers.”
The supermarket chain has expanded from 50 stores in 2007 to 617 stores last year, and aims to reach 1,200 stores by 2022, Liu said.
It has also developed a franchise system since 2011 and hopes to increase their contribution to 38 percent next year from 20 percent last year, she said.
Given the retailer’s solid SSS growth and its store expansion, consolidated sales in the first 11 months of the year rose 6.8 percent year-on-year to NT$10.96 billion, a company regulatory filing showed.
Thanks to a better product mix, with more sales of private label and imported goods, as well as a higher contribution from franchises, net income in the first half of the year totaled NT$57.78 million, up 31.33 percent from a year earlier, with earnings per share of NT$1.25.
In terms of equity investment, “retail names are also considered defensive under the shaky broad market,” Liu said.
Shares of Simple Mart Retail are to be traded from NT$110 today under the stock number 2945.
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