Developing a taste for convenience stores and pizza
Smaller companies becoming larger over time
At Scottish Oriental, what excites us most about the portfolio is that we own smaller companies across Asia which have the potential to emerge as much larger businesses in future. They operate in underpenetrated sectors in large markets, which offer a long runway for growth. We believe these companies can grow multiple times their current size, as income levels per head of population (per-capita) across Asia continue their steady rise. We highlight a few of our key holdings below where we see opportunities in the consumer staples and discretionary sectors.
Convenience stores and pizza
Philippine Seven Corporation is the exclusive franchise operator for 7-Eleven stores in the Philippines, with a market cap of just US$1.4bn*. Under the leadership of Jose Victor Paterno, who comes from the founding family of the business, Philippine Seven has built a dominant position in convenience stores, with over 4,000 stores across the country and 58% market share – more than twice as large as its nearest competitor. The management has also broadened its product range to serve the evolving needs of consumers, such as fresh coffee and meal options as well as basic financial services.
Philippine Seven Corporation is the exclusive franchise operator for 7-Eleven stores in the Philippines, with a market cap of just US$1.4bn*. Under the leadership of Jose Victor Paterno, who comes from the founding family of the business, Philippine Seven has built a dominant position in convenience stores, with over 4,000 stores across the country and 58% market share – more than twice as large as its nearest competitor. The management has also broadened its product range to serve the evolving needs of consumers, such as fresh coffee and meal options as well as basic financial services.
Philippine Seven Corporation is the exclusive franchise operator for 7-Eleven stores in the Philippines, with a market cap of just US$1.4bn*. Under the leadership of Jose Victor Paterno, who comes from the founding family of the business, Philippine Seven has built a dominant position in convenience stores, with over 4,000 stores across the country and 58% market share – more than twice as large as its nearest competitor. The management has also broadened its product range to serve the evolving needs of consumers, such as fresh coffee and meal options as well as basic financial services.
As per-capita incomes grow and customers prioritise convenience, the proliferation of convenience stores is expected to rise consistently.
Despite the strong growth, the penetration of convenience stores in the Philippines is still below 10% of total modern retail sales, compared to 30-70% in other regional markets such as Thailand, Taiwan and Indonesia. As per-capita incomes grow and customers prioritise convenience, the proliferation of convenience stores is expected to rise consistently. With its clear market leadership, which the management is strengthening further, Philippine Seven has the potential to emerge as a much larger business in the coming years.
Another example is DPC Dash, the exclusive franchise operator of Domino’s Pizza in China. While Domino’s has been present in China since 1997, a group of entrepreneurs led by the current chairman acquired the franchise in 2010 and began expanding the business. It has grown rapidly in recent years and now has over 1,000 stores in more than 30 cities. In comparison, Yum China, the largest restaurant group in China, has more than 15,000 stores, which suggests there is plenty of room for DPC Dash to grow.
Another example is DPC Dash, the exclusive franchise operator of Domino’s Pizza in China. While Domino’s has been present in China since 1997, a group of entrepreneurs led by the current chairman acquired the franchise in 2010 and began expanding the business. It has grown rapidly in recent years and now has over 1,000 stores in more than 30 cities. In comparison, Yum China, the largest restaurant group in China, has more than 15,000 stores, which suggests there is plenty of room for DPC Dash to grow.
Another example is DPC Dash, the exclusive franchise operator of Domino’s Pizza in China. While Domino’s has been present in China since 1997, a group of entrepreneurs led by the current chairman acquired the franchise in 2010 and began expanding the business. It has grown rapidly in recent years and now has over 1,000 stores in more than 30 cities. In comparison, Yum China, the largest restaurant group in China, has more than 15,000 stores, which suggests there is plenty of room for DPC Dash to grow.
Another example is DPC Dash, the exclusive franchise operator of Domino’s Pizza in China. While Domino’s has been present in China since 1997, a group of entrepreneurs led by the current chairman acquired the franchise in 2010 and began expanding the business. It has grown rapidly in recent years and now has over 1,000 stores in more than 30 cities. In comparison, Yum China, the largest restaurant group in China, has more than 15,000 stores, which suggests there is plenty of room for DPC Dash to grow.
Another example is DPC Dash, the exclusive franchise operator of Domino’s Pizza in China. While Domino’s has been present in China since 1997, a group of entrepreneurs led by the current chairman acquired the franchise in 2010 and began expanding the business. It has grown rapidly in recent years and now has over 1,000 stores in more than 30 cities. In comparison, Yum China, the largest restaurant group in China, has more than 15,000 stores, which suggests there is plenty of room for DPC Dash to grow.
Domino’s has built strong brand equity in China through its focus on the pizza category, menu innovations and strong delivery capabilities. As it expands into smaller cities, it has received a strong consumer response. With greater scale, the company’s profitability and returns on capital should improve significantly. The business has the potential to be dominant in the pizza category and eventually become several times its current size.
A long history of investing in Asian small caps
At Scottish Oriental, our investment approach is aimed at preserving capital and growing it sensibly. This approach has remained steadfast since the Trust was established in 1995. We construct the portfolio by focusing on specific company quality over broader macroeconomic factors, meeting with hundreds of companies each year to seek out high-quality businesses with competent management teams and an established track record of performing well in different business environments.
After three decades of investing in Asia, we have built strong networks across the region. We are long-term investors, with an investment horizon of at least five years (and typically beyond), which means we are often viewed favourably by the owners and management teams of these companies as a long-term stakeholder.
We are excited about the long-term outlook for Scottish Oriental’s holdings and believe that they will continue to provide investors with attractive growth opportunities in the years ahead.
* All company data herein retrieved from company annual reports or other such investor reports. As at 31 August 2025 or otherwise noted.
About Scottish Oriental Smaller Companies Trust plc
Scottish Oriental is one of the longest running investment trusts that invests in Asian smaller companies.
Risk factors
Capital at risk. The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
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Scottish Oriental Smaller Companies Trust plc (“Company”) is an investment trust, incorporated in Scotland with registered number SC0156108, whose shares have been admitted to the Official List of the London Stock Exchange plc. The Company is an alternative investment fund and has appointed First Sentier Investors (UK) Funds Limited as the alternative investment fund manager for the Company. Further information is available from Client Services, First Sentier Investors (UK) Funds Limited, Finsbury Circus House, 15 Finsbury Circus, London, EC2M 7EB or by telephoning 0800 587 4141 between 9am and 5pm Monday to Friday or by visiting www.scottishoriental.com. Telephone calls with First Sentier Investors may be recorded.
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