PPIH Earnings: Solid Domestic Margins From Operating Leverage; Raising Fair Value by 8%

No-moat Pan Pacific International Holdings reported fiscal first quarter 2025 (year ending June 30, 2025) results that exceeded our estimates on solid margins in the domestic discount store business, while other segments are broadly in line with our estimates. Management highlighted the initiatives to further leverage its expertise in the discount store business to improve operational efficiencies in the general merchandise store segment, which we view positively. We raised our fiscal 2026-29 operating profit projections by 5%-7% to account for better margins across the discount store and GMS segments.