July 20, 2014

SEVN posts 24.6% net income growth in 2Q14

Philippine Seven Corp (SEVN, Not Rated) disclosed to the Exchange that its net income grew 24.6% YoY in 2Q14 to P224m, bringing 1H14 earnings 9.4% higher to P324m. 2Q14 sales grew 21.9% to P5.3b, bringing 1H14 sales 14.5% higher to P9.78b. The company attributed the increase to strong same store sales growth which was not disclosed. Management also revealed plans to spend P2b to open 300 new stores and renovate almost 100 stores this year.

Our take: Earnings appear to have recovered from the 87.7% decline registered in 1Q14 due to declining margins. While the company did not discuss the trends in margins in 2Q13, sales growth did improve over the 6.3% rate posted in 1Q14. We note that 1Q14 was a challenging time for retailers in general and convenience store operators in particular as cigarette sales plunged on account of higher taxes. – WealthSec