{"id":320247,"date":"2023-01-05T11:32:07","date_gmt":"2023-01-05T03:32:07","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=320247"},"modified":"2023-01-08T17:36:31","modified_gmt":"2023-01-08T09:36:31","slug":"stock-in-focus-rrhi-5-jan-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-rrhi-5-jan-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Robinsons Retail Holdings Inc. (RRHI) – 5 Jan 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>RRHI<\/td><\/tr>
Company Name<\/strong><\/td>Robinsons Retail Holdings Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>5 Jan 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 87.20<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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At our Target Price of P87.20 per share (51.4% upside)<\/strong>, we believe that RRHI remains a solid retailing pick heading into next year. <\/p>\n\n\n\n

Though the macroeconomic environment may pose challenges pertaining to the sales of its discretionary formats (ie. department stores, specialty stores, etc.), its supermarket segment (56.8%) and focus on margin performance should continue to drive earnings. At its current Price-Earnings Ratio (PER) of 14.5x, RRHI is trading very cheaply at more than 2stds below its historical PER.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

As the 3rd largest supermarket\/hypermarket operator (based on store count), RRHI is capable of reaching a wide variety of consumers due to the flexible nature of its store formats. This would therefore allow the company to capture a wide spectrum of consumer spending, both from the necessities-driven purchasing of classes C, D, and E, and even from the higher margin shopping of classes A, and B (via its Marketplace format). <\/p>\n\n\n\n

As such, the company will therefore likely see sustained volumes while also being able to maintain higher pricing in its more upscale formats. Although its growth will likely be outpaced by fellow competitor PGOLD whose focus lies in affordability, RRHI still holds the advantage when it comes to margins. <\/p>\n\n\n\n

For 2023, we see gross profit margin (GPM) at 24.12%, a 35bps improvement compared to 2022 levels of 23.77%, which should translate to over 9% growth in gross profits. In addition to this, the company is also a prime beneficiary of the lower income taxes (as per TRAIN Law) that will now be slapped onto consumers.<\/p>\n\n\n\n

In addition to this, RRHI\u2019s efforts to improve operating leverage should further buoy operating margin performance. From 2019 to 2021, OPEX-to-Sales has averaged 19.4%, higher than the 19.0% seen during 2016 to 2018. With the recent announcement however of the merger between Robinson\u2019s Supermarket Corp. (RSC) and Robinson\u2019s Convenience Stores, Inc. (RCSI), synergies are expected to be taken advantage of which should eventually lead to a reversal of the OPEX trend and a potential lowering of our 19.7% OPEX-to-Sales assumption.<\/p>\n\n\n\n

Lastly, RRHI\u2019s continued ramp up of its e-commerce efforts should further aid operating leverage given that this would allow further avenues for sales expansion beyond the traditional brick and mortar setup.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>