Taiwan firm eyes bigger stake in local 7-Eleven

The Taiwanese franchise holder of the local 7-Eleven convenience store chain plans to raise its stake in the publicly listed Philipine Seven Corp. (Phil-Seven).

The President Chain Store (PSC) of Taiwan, the pioneer in the convenience store concept in Taiwan and a member of Taiwan’s retail giant Uni-President Corp., currently owns 56.69 percent of Phil-Seven, the local operator of the 7-Eleven convenience store chain. The investment was made following the liberalization of the retail trade sector in 2000, which allowed foreign companies to invest in retail firms.

Phil-Seven president Yeong Hsiang Yeh told reporters after the company’s stockholders meeting the other day that PSC is open to increasing its investment in Phil-Seven as it expressed confidence in the viability of the latter and in the long-term growth of the Philippines.

Phil-Seven chairman Vicente T. Paterno said he, along with other major shareholders of the company, will meet with PSC officials in Taiwan to discuss measures needed to keep up with the highly competitive convenience store business.

"We can’t rely on continued borrowings as ourdebt-to-equity ratio is already above 1:1. We would have to determine whether PSC would want to increase its shareholdings and whether Filipino shareholders are open to being diluted to allow PSC to buy more shares," Paterno said.

Paterno has a 12 percent stake in Phil-Seven. Another 12 percent is held by former Trade and Industry Secretary Jose T. Pardo while the Araneta family owns 10 percent.

As of end-December last year, PSC had P210 million in bank loans, comprising of P40 million in short-term debt and P110 million in long-term facilities.

Paterno said Phil-Seven is aiming to double its profits this year through an aggressive store expansion and product launches. The company plans to set up a total of 25 new stores, mostly in the country’s central business districts. This shall bring Phil-Seven’s total branch network to 260 by yearend.

After three years of consecutive losses, Phil-Seven returned to profitability last year with a net income of P9.3 million. Efffective management of cost and expenses helped the company reverse the downward trend since 2000.

As of June 4 this year, Phil-Seven had a total of 247 operating stores, inclusive of the 35 Binggo convenience stores acquired from the Jollibee Group in March for P130 million.

Paterno said the company has earmarked P110 million for the establishment of new stores, refurbishment of existing ones and the improvement of operating systems. It intends to introduce a barcode scanning system to enhance efficiency.

Other activities geared to promoting sales and expanding Phil-Seven’s market base will be aggressive promotional activities and the introduction of new products.

The expansion would be financed by a combination of internal funds and bank borrowings.