Cosco Capital signs P500-M joint venture to get into construction supply and housewares business

Cosco Capital [COSCO 4.34 2.36%] [link] announced that it has signed a P500-million joint venture agreement with Siam Global House Public Company Limited (SIAM), a Thai company, to operate a “one-stop warehouse for building and construction-related materials, home and garden decorative goods, home improvement goods, construction equipment, and tools”. SIAM will own 55% of the joint venture, while COSCO will own 45%.

The joint venture is looking to complete the construction of 3 to 5 stores in the next 12 to 18 months. SIAM operates a similar concept in Thailand, where it has 76 locations.

COSCO is a holding company owned by Lucio Co, which in turns owns other retailers like Puregold [PGOLD 31.00], S&R Membership Shopping, and The Keepers [KEEPR 1.12 1.75%].
 

MB BOTTOM-LINE

The group’s original footprint will focus on Metro Manila, and regions to the north and south of it.

This puts the COSCO/SIAM joint venture in direct competition with William Belo’s Wilcon Depot [WLCON 23.45 0.64%], which operates 63 locations of the same home improvement and construction supplies concept.

It also puts COSCO/SIAM in competition with Manny Villar’s AllHome [HOME 4.55 1.79%] and its 58 locations.

I don’t have any experience in a Global House store in Thailand (that’s the brand name that SIAM uses for its stores), but the pictures make it look a little closer to a WLCON than a HOME location, with a greater focus on the construction supply side of the business.

Altogether, this industry is acting like it is in the depths of a growth phase: it’s not a zero-sum game yet (where WLCON’s gain is HOME’s loss and vice versa), so each competitor is just out there to soak up as much of the unmet demand as possible.

WLCON is looking to push its store location count to 100 by 2025.

HOME is looking to hit 100 stores by 2026.

This COSCO/SIAM effort seems small in comparison, but SIAM has the DNA to operate this kind of business at scale, and Lucio Co is no stranger to aggressive expansion with his PGOLD looking to put up 25 new stores this year alone.

I’ll be watching closely to see how the group’s attitudes evolve over the first few months of their partnership.

--

Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.