Uni-President Enterprises' Revenue and Margin Slightly Beat Our Estimates, Raising FVE to TWD 64

No-moat Uni-President Enterprises, or UPEC, reported 2021 results with revenue and net margin coming in 1 percentage point and 20 basis points higher than our estimates. Uni-President China and the container/packing businesses were top-line and profit growth drivers. Due to rising commodity prices and the effect of the coronavirus, the operating margin for the group’s food and beverage, or F&B, and convenience store/retail segments fell year on year. The container/packing segment benefited from rising commodity prices and expanded its profit contribution to the group, partially offsetting the drags from some other businesses. We raise our fair value estimates moderately to account for better-than-expected 2021 earnings, to TWD 64 per share from TWD 63 per share . Our fair value estimate implies 16 times forward P/E and 4.5% dividend yield, assuming a 75% payout ratio in 2022. We see the company’s stock as fairly valued and consider the current share price to have largely priced in a post-COVID-19 recovery for the group.