FREE Stock in Focus: GERI (22 March 2021) by Regina Capital Dev’t Corp.

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Summary of Broker’s Recommendation
Regina Capital Dev’t Corp. HOLD 0.90 22 March 2021


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Our Partner Broker’s Recommendation

We maintain our 12-month Fair Value Target Price for GERI at P0.90 per share. At its last traded price of PHP 0.82, our fair value would no longer provide a significant upside. Therefore, we downgrade our recommendation to HOLD.


Our Partner Broker’s Analysis

We are revising downward our estimates for Global-Estate Resorts, Inc. (GERI) prior to its full-year (FY) 2020 earnings release on account of a slower expected rebound in residential sales. Key movers for growth this year are 1) 2020’s significantly low base, 2) economic recovery hinged on a successful vaccination program, and 3) an increase in number of residential launches vs. 2020’s anemic figures.

GERI’s consolidated revenues for 9-Month 2020 plunged -35% year-on-year (y/y) due to the impact of the pandemic. Unlike majority of the property companies, GERI’s quarterly revenues have been declining since the start of 2020. This is as opposed to the usual sequential recovery following a dip in the second quarter of 2020 (2Q20). As such, it is unlikely that GERI posted a significant quarter-on-quarter (q/q) improvement in fourth quarter of 2020 (4Q20). Best case, topline ended flat.

We expect real estate sales in 2021 to grow largely on the back of a significantly low base last year. While there will be some improvement in revenue recognition, it is unlikely that GERI will be able to go back to pre-COVID levels this year.

Our forecast for the segment remains skewed to the downside, however, improving reservation sales keeps this risk at bay.


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Regina Capital Development Corporation
Regina Capital Development Corporation

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