UPEC Earnings: Mainland China Business and Restructuring of Carrefour Taiwan Weighed on Results

No-moat Uni-President Enterprises', or UPEC's, third-quarter results trailed our estimates due to margin pressure across its mainland China food business and Taiwan retail segment. Top-line growth was broadly consistent with our estimates, thanks to momentum from convenience stores and consolidation of Carrefour Taiwan revenue. We do not expect a meaningful profit contribution from Carrefour Taiwan this year. We lower our 2023 operating profit projection due to weaker results but retain our fair value estimate at TWD 68 per share. There is limited change to our post-2023 profit estimate, which implies 17 times 2024 price/earnings and 6 times EV/EBITDA. We think UPEC is fairly valued.