13 Oct 2019 / by Regina Capital Development Corporation
FREE Stock in Focus: EAGLE (14 Oct 2019) by Regina Capital Dev’t Corp.
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Summary of Broker’s Recommendation
|BROKER||RECOMMENDATION||TARGET PRICE||ISSUED ON|
|Regina Capital Dev't Corp.||BUY||18.00||14 Oct 2019|
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Our Partner Broker’s Recommendation
Given the continued stable performance, in line with estimates, we are maintaining our BUY recommendation on EAGLE with a Target Price of P18.00/share.
Our Partner Broker’s Detailed Analysis
Eagle Cement Corporation remained on top of its peers in the 1st Half (1H) of 2019, even as headwinds in the local cement industry barreled through cement sales volumes of most major players.
The cement industry has been under a lot of pressure lately, as the saga between local cement manufacturers and cement importers regarding the safeguard duty on imports persists. While the initial duty failed to stem the surge in cement imports in 1H 2019, the DTI resorted to slapping a higher tariff of P10/40-kg bag of cement during the first year of implementation—set with a gradual reduction, hinged on the effectiveness of the duty on increasing competition in the local scene.
Amid this, Eagle outperformed its listed peers under our coverage. With both HLCM and CHP posting relatively weaker sales volumes during the semester, only Eagle was able to record a significant increase in topline (+27.81% y/y to P10.49 billion). This was at the back of a single-digit price adjustment fueled by increasing demand from the private sector and the infrastructure push of the government.
We estimate that the upside to the improving industry conditions will hold, at least within the next years. This, coupled with the heightened government infrastructure spending, will ensure that Eagle’s topline will remain to be on the healthy side—with the promise of double digit growth well within reach. The scheduled expansions to be completed in 2020 and 2021 will consequently improve the manufacturer’s operational capacity, thus allowing for improved margins and increased transactions.
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OTHER STOCKS IN FOCUS FOR THIS STOCK
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Regina Capital Development Corporation
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