UPEC Earnings: Mainland China Food Business Drove Solid Operating Profit Growth; Keeping Fair Value

No-moat Uni-President Enterprises’, or UPEC’s, first-quarter results were broadly consistent with our estimates. Revenue growth was driven by the consolidation of Carrefour Taiwan into its retail segment, while the mainland China food business drove operating profit growth. We keep our 2024-28 earnings forecasts unchanged and retain our fair value estimate at TWD 68 per share, which implies 17 times 2024 price/earnings, 5 times enterprise value/EBITDA, and 4.3% dividend yield. We think shares are currently overvalued, and we prefer names in the China packaged food sector, such as Tingyi and WH Group, with higher dividend yields.