President Chain Store's Taiwan 7-Eleven Q1 Per-Store-Daily Lower Than Expected; Cut FVE to TWD 259

President Chain Store reported first-quarter 2022 results with a modest year-on-year growth in sales and mid-single-digit decline in net profit. Revenue growth was driven by most segments except convenience stores in Taiwan, whereas one-off non-operating loss due to a warehouse fire had lowered profit before tax by around TWD 100 million-TWD 200 million. The absence of lower tax rates versus 2021 also brought net margin lower for the quarter, to 3.8% (from 4.2% in first-quarter 2021). We reduced our 2022 revenue and profit assumptions given weaker 7-Eleven Taiwan sales in the first quarter and expect lower margins with more investments in marketing and digitalization. Higher profit sharing to franchisees is set to raise medium-term selling expenses. As a result, we lowered our fair value estimate to TWD 259 per share, from TWD 265 per share.