Pan Pacific International Holdings <7532> hit a year-to-date low of 869.3 yen on May 7. However, given strong same-store sales and last month's announcement to make Olympic Group <8289> a subsidiary, the stock appears oversold, with a reassessment likely to gain momentum.

Same-store sales in the domestic retail business exceeded year-earlier results for 46 consecutive months through March. Customer traffic rose due to enhanced pricing strategies for popular products and price-freezing measures amid rising costs. In March, promotional campaigns marking 20 million majica app members and TV commercials also boosted traffic. Following a 22.4% year-on-year increase in private brand (PB) and OEM sales for the six months through December, these products are expected to remain key contributors.

Beyond same-store strength, the company announced a business integration with Olympic Group via a share exchange on April 6. Pan Pacific International will allocate 1.18 shares for each Olympic Group share, making it a wholly owned subsidiary on July 1. With roughly two-thirds of Olympic Group's stores in Tokyo and minimal expected cannibalization of existing locations after conversion, the move should expand market share in the Greater Tokyo area and significantly boost earnings. While the company forecasts operating profit of 174 billion yen for the fiscal year ending June 2026, up 7.2% year-on-year, consecutive profit growth is also expected for the fiscal year ending June 2027.

Source: MINKABU PRESS

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