UPEC's Q3 Earnings Dragged by Cost Pressure; Turnaround Expected in 2023; Raising FVE to TWD 67

No-moat Uni-President Enterprises, or UPEC, reported third-quarter results with resilient top line growth which exceeded our estimates, but gross margin came in lower than our forecasts and operating profit only trended flattish year on year. The food, retail, and convenience store segments delivered solid sales growth, but declining profit in food and container/packing businesses were a drag on UPEC’s bottom line. We raise our revenue projection for 2022, but lower the gross and net margin estimates.