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President Chain Store set to expand this year

TAIPEI, Taiwan -- President Chain Store Corp. (PCSC, 統一超商) is set to expand this year, opening more stores, including 7-Eleven convenience stores and Starbucks coffee shops, to reach 8,300 in total, domestic and foreign combined.

After PCSC President Ray Chen (陳瑞堂) took the reins two years ago, he initiated a process to eliminate business units that failed to break even, and focused the company's resources on cultivating core businesses. PCSC has seen significantly improved performance as a result as the company's EPS and dividend payout hit new records last year.

After undergoing two years of internal restructuring, the company is now ready to expand. PCSC announced that the total number of 7-Eleven convenience stores in Taiwan will reach more than 5,000 this year. The company's reinvestment business groups such as Starbucks, drugstore COSMED and other food services will be expanding into new territories this year as well.

In addition, PCSC has expressed a desire to expand overseas. The number of 7-Eleven stores in Shanghai is set to reach 100 this year, while the number of Starbucks in the city is set to reach 600. All in all, the number of retail stores owned by PCSC in mainland China will reach over 1,000. PCSC also has a strong presence in the Philippines, where the company is realizing the economy of scale and plans to expand the number of stores to 1,200.

PCSC said that it has closed underperforming 7-Eleven stores in Shanghai, and that it has found the right business model. Although the company is still losing money in China, it lost NT$130 million less in 2013 compared with that in 2012, PCSC said, adding that the new business model is making on average a 10-percent increase in sales across 7-Eleven stores in Shanghai. Starbucks in Shanghai, however, has seen the most success and the company intends to increase Starbucks' rate of expansion. PCSC may open 138 additional Starbucks this year.

Institutional Investors Express Confidence in PCSC

By the end of 2013, PCSC had a total of 7,714 stores, domestic and foreign combined. The company plans to add 586 this year to reach 8,300 in total. According to institutional investors, the company is aiming for double-digit growth in profits.

Barclays PLC and HSBC have both increased their rating on the stock of PCSC, setting its target price at NT$245 and NT$240 respectively. Deutsche Borse Group is comparatively more conservative, setting the target price at NT$206.

PCSC is one of Barclays PLC's first picks among Taiwan's stocks. As merger and acquisitions become more prevalent, PCSC intends to open new stores in the next couple of years to cope with the new situation, Barclays said. Also, 7-Eleven is now offering more product types in stores, such as ice cream, fruit and vegetables, in an effort to boost growth in same store sales, Barclays added.

HSBC is also optimistic about 7-Eleven's performance in the near future. PCSC's subsidiaries are expected to drive its growth in the next three years, assisted by the parent company's strong sales ability, HSBC said.

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Ray Chen (陳瑞堂), president of the President Chain Store Co. (統一超商), says that the company is expecting to hit 5,000 7-Eleven convenience store locations in Taiwan ahead of schedule by the end of this year, at a press event in Taipei, yesterday. (CNA)

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