Monday, April 24, 2023
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TODAY’S TOPICS
IN FOCUS We continue to comb through the financial statements of companies that
_____________
recently submitted them to discover new information we can use to make
better investment decisions.
MM We reiterate that the tobacco segment will remain a strong driver of cash
P1.34, +4.69% flows for LTG and help maintain its high dividend yield.
We are sticking to our view that BPI -loaded
than its peers and that profit growth will slow more quickly going forward. We
therefore remain partial to BDO and MBT.
We remain a Buy on KEEPR as the company s outlook for this year remains
strong.
PIZZA s acquisition of Potato Corner now looks like a steal and we estimate
that the latter should add more than P2.00/sh to the former s share price. We
are a Hold for now.
OCUS: 2022 POSTSCRIPT PART 2
companies that have recently submitted them. These new data and information help
us to make better investment decisions.
MerryMart.
the benefit of the actual financial statements. Last Thursday, we discovered that
there was a Php263M non-recurring gain arising from the acquisition of Carlos Drug
booked in 4Q22. Without this, and accounting for Php17M in minority interest,
MerryMart's recurring profit was only Php42M. This would mean a net margin of
0.6% which is the lowest among its retailer peers. It also results in a trailing P/E of
look cheap. Unless these metrics improve, investors
would be better off looking at other stocks. More importantly, however, the
Php262M gain was inexplicably included in gross profit and operating income and
ad accounting at best.
Monday, April 24, 2023
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Monday, April 24, 2023
IN FOCUS
_____________
UPSON
P2.39, 0.0%
Upson.
close look at the financial statements. Q4 accounted for 41% of full year profit in 2021
but only 26% last year. Globally, PC sales declined in 4Q22 but it could also mean
that consumer spending was starting to slow. We also noticed a large increase in
inventories, probably because management prepared for a robust holiday period in
about 136 days' worth of sales. This is a large jump compared to 111 days at end-2021
and only 86 days at end-
possibility of a large inventory impairment rises. Q1 numbers will be crucial in this
regard so investors should wait before buying shares of UPSON.
Monday, April 24, 2023
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Monday, April 24, 2023
IN FOCUS Megaworld. Last week, we noted the huge potential exposure FLI has on its floating
_____________ rate loans. But how does this compare to its peers which, in this case, we mean MEG
and VLL. The latter may surprise most but all of its debts have fixed rates and it has
no interest rate exposure. This is ironic considering VLL has the highest net debt to
MEG equity ratio among the property companies we cover. Meanwhile, by our count, the
P1.98, -0.50% former had about Php38.0B in floating rate debt at end-2022. If we apply the same
sensitivity as we did with FLI (an increase of 300 bps), the additional interest
LTG -
P10.02, +0.50%
forward P/E ratio is less than 3.0x which is the cheapest among the six. We still
over the next 12 months.
SIGNIFICANT DIGITS
-31%: Philip Morris reported that volumes for its Philippines business declined by
31% in Q1 to 6.7B sticks. The huge drop is probably due to trade loading in 1Q22 prior
to the price increase last year. Additionally, the 6.7B is 72% lower than the 23.5B
sticks sold in 1Q12 which is the year before the sin tax law took effect. The chart
below, however, shows that the tobaccos business remains far more profitable
today than it was in 2012. This is partly due to the demise of Mighty but it is also
because consumers tr
price gap with the cheaper brands. What we want to reiterate is that the tobacco
segment will remain a strong driver of cash flows for LTG and help maintain its high
dividend yield.
Monday, April 24, 2023
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IN FOCUS RANDOM THOUGHTS
_____________
1.
the press release last Thursday. The bank recorded earnings of Php12.1B last
BPI quarter, up 52% YoY and ahead of the pace to meet full year consensus. This
P102.80, +2.59% impresses more given that average estimates have already risen close to 11%
YTD. The performance was driven by higher net interest income (+27%), higher
KEEPR NIM (+52 bps to 3.94%), and lower provisions (-60%). These more than offset
P1.51, -3.21% the large (+20%) increase in operating expenses which may be the highest in the
sector. We will know more when BPI holds an earnings call but, for now, we are
PIZZA -loaded than its
P8.60, -0.92%
peers and that profit growth will slow more quickly going forward. We therefore
remain partial to BDO and MBT.
2. KEEPR reported that FY22 net income jumped 41% to Php2.2B. This is about
what we expected but Q4 revenue growth slowed significantly to +14%. It was
more dramatic for gross profit which actually declined 14% during the period as
gross margin sank 660 bps YoY and 890 bps QoQ. However, management
explained that this was due to a timing difference related to the sales of W&H for
goods in transit items as recommended by auditors. This will be adjusted and
reverted back in 1Q/2Q of this year. Meanwhile, the company expects the
Php100M profit contribution from its stake in Bodegas will be much better this
year. Overall, the outlook for this year remains strong as officials said they are
seeing growth across all categories so far. We remain a Buy on KEEPR.
3.
thought. Based on details provided in previous briefings and our own estimates,
we show below the evolution of Shakeys
years. As of 4Q22, we estimate that PC accounted for a third of the total and is
growing at a faster rate. We also believe that PC contributed about 20% of
ompany may not
have breached pre-
for PC (Php2.6B) now looks like a steal and that the share price is actually lower
today than prior to the acquisition. And with analyst coverage nearly gone, we
believe there is an opportunity in the stock. We will have to take a deeper dive
but PC alone should add more than Php2.00/share to PIZZA. Hold for now.
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IN FOCUS
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Unit 2904-AEast Tower, Philippine www.mytrade.com.ph [email protected] 8667-8900 (63.2) 634-5206
Stock Exchange Centre, Exchange
Road, Ortigas Center, Pasig city 1600
Monday, April 24, 2023
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