PCSC Earnings: Beats Estimates, With Retail Boosting Growth in 2023; Raising Fair Value to TWD 274

Narrow-moat President Chain Store Corp.’s first-quarter results beat our estimates, as all major business segments recorded resilient sales growth and product mix improvement. We've raised our forecasts for 2023 revenue and net profit as well as five-year contributions from the 7-Eleven business in the Philippines. This lifts our fair value estimate to TWD 274 per share (from TWD 263), which implies 27 times 2023 price/earnings, broadly in line with the five-year average. The Philippines segment is set to add 30 basis points to the five-year net profit CAGR of 5.6%, but we think the current share price has already reflected this new growth driver. As a result, we still see PCSC’s shares as moderately overvalued.