BOJ keeps interest rates flat, but flags rate hikes on rising inflation, GDP
On Monday, CLSA analyst Nigel Muston upgraded Pan Pacific International Holdings Corp (7532:JP) (OTC: DQJCY), a $16.75 billion market cap retailer, to High-Conviction Outperform from Outperform and increased the price target to JPY5,360 from JPY5,200. Muston’s upgrade reflects Pan Pacific’s successful adaptation to the inflationary environment, which has resulted in a year-to-date same-store sales growth of 5.8%, complementing its broader revenue growth of 8.48% over the last twelve months.
The analyst praised Pan Pacific for its effective cost control measures and expanding gross profit margins of 31.98%, which have been bolstered by an aggressive private-brand strategy. These factors contribute to the firm’s ability to meet its ambitious operating profit target of ¥200 billion by fiscal year ending June 30, 2027. According to InvestingPro analysis, the company currently appears slightly overvalued, trading at a P/E ratio of 26.57x.
Muston anticipates that Pan Pacific will continue to outperform its major competitors and expects further positive revisions to the company’s forecasts. He also suggested that another upgrade from Pan Pacific might be announced during the third-quarter results in May.
The revised price target of JPY5,360 is based on a price-to-earnings ratio of 26.5 times, which remains unchanged. Muston’s outlook is supported by a forecast of strong double-digit growth for Pan Pacific in the fiscal years 2025 through 2027.
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