FREE Stock in Focus: FRUIT (3 Nov 2020) 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 1.56 3 Nov 2020

 

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Our Partner Broker’s Recommendation

Although we expect that FRUIT will see its bottomline dip for the rest of the year, we are optimistic that it will be able to reap all the fruits of its 2020 expansions by 2021. Using Discounted Cash Flow (DCF) valuation, we are revising our Target Price to PHP 1.56 apiece, while we maintain our BUY recommendation on FRUIT.

 

Our Partner Broker’s Detailed Analysis

Almost a year after being a publicly listed company, Fruitas Holdings, Inc. (FRUIT) is still looking out aggressively for brands that can contribute value to the company. As a matter of fact, it was able to add Carmen’s Best Ice Cream and Jim’s Recipe of Malaysia on its portfolio of brands it sells in its stores amid the pandemic. As expected, most of the firms got impacted with the dragging effects of the on-going health crisis, with no exemption to FRUIT.

During the 1st Half (1H) of 2020, when it incurred a net loss of –PHP 12 million from 2019 Net Income of PHP 52 million, its delivery service stepped up and had its commissary products such as bottled juices, soy milk and frozen patties as its main bread and butter in the middle of a challenging period.

Despite the pandemic, FRUIT cannot be seen to stop any time soon at finding synergies on its existing and prospect partnerships as it plans to expand its network through rationalized store openings and additional community stores.

Knowing this move of the company, we think that FRUIT will be able to further capitalize on the growing health consciousness of the public, fundamentally improve the company’s margins. Demand can also be seen to start picking up at the onset of 2021E and on the back of a more lenient community quarantine restrictions.

 

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Regina Capital Development Corporation
Regina Capital Development Corporation

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