Continued focus on rollout of small-format stores in city centers

Research evidence excerpt

Continued focus on rollout of small-format stores in city centers

amortization) of around ¥1.0b in FY10/27, based on certain assumptions.

Over the three-year period through FY10/28, we forecast CAGR of 9% in

sales and 9% in OP.

WATCH: Small-format Gyomu Super stores in city centers

We continue to keep an eye on Kobe Bussan’s rollout of small-format Gyomu

Super stores located in city centers as a means of boosting its store opening

potential. According to company reps, it has already secured the location for

its first directly operated small-format store. We believe there is a possibility

that G-7 Holdings, which is the largest franchisee with over 200 GyomuSenior Analyst Hideya Asaeda

+81 3 6202 8598 hideya.asaeda@mizuho-sc.com Super stores, could convert its small-format food supermarket chain Rico’s

Senior Analyst Toshio Takahashi to the Gyomu Super brand. In May, Kobe Bussan announced a capital and+81 3 6202 8325 toshio.takahashi@mizuho-sc.com

operational tie-up with Makiya, which is also considering opening small-

Click here for ESG on format Gyomu Super stores in city centers, so we will be keeping a close eye

our entire coverage on developments.

MEASURE: Applying roughly 19.5x PER to our FY10/27 EPS estimate

We lower our price objective from ¥4,100 to ¥2,750, which is based on our

FY10/27 EPS estimate and a PER of about 19.5x (previously around 28x).

The target multiple represents a roughly 20% discount to the average PER

in the retail sector (roughly 25x). We lower our target multiple to reflect the

slight slowdown in sales momentum at Gyomu Super and the lack of visibility

at present regarding earnings contribution from the in-flight meal company.

Consolidated results and forecasts Share Price: ¥2,537 (19 Jun) 52wks: H ¥4,670 L ¥2,516