{"id":323108,"date":"2023-05-09T08:16:32","date_gmt":"2023-05-09T00:16:32","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323108"},"modified":"2023-05-09T08:16:34","modified_gmt":"2023-05-09T00:16:34","slug":"stock-in-focus-universal-robina-corp-urc-9-may-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-universal-robina-corp-urc-9-may-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Universal Robina Corp. (URC) – 9 May 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>URC<\/td><\/tr>
Company Name<\/strong><\/td>Universal Robina Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>9 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 168.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Given the outperformance to our estimates, we continue to recommend a BUY on URC with a Target Price of P168.00 per share.<\/p>\n\n\n\n

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

URC\u2019s core earnings came in above our estimates (26.7%), but were in-line with the street\u2019s expectations (25.3%). Elevated input costs continued to put pressure on margins, although this was offset by the company\u2019s cost savings initiatives. In terms of absolute net income, the company would see a slight decline, owing to higher finance costs and a one-time impairment charge on farm assets.<\/p>\n\n\n\n

Sales grew by 11.2% as the company continue to realize the impact of price increases in both its domestic branded food, and sugar & renewables businesses. The international branded food business in the meantime, saw expansion of 12.9% due to strong performances in Vietnam, Malaysia, and Myanmar. Likewise, the agro-industrial segment saw growth north of 20%, driven by its animal feeds products. Gross margins declined by 50bps however, as the company noted that the costs of several inputs continued to remain high. Nevertheless, OPEX-to-Sales slipped by a steeper 80bps as URC continued to implement cost reduction programs. <\/p>\n\n\n\n

As a result, operating margins still managed to eke out a 30bps gain, with growth in absolute operating income (+14.5%) outpacing that of revenues. We note however, that inventory turnover for the quarter was much lower at 0.71x vs 1.32x from last year, which would indicate that volumes were likely not as strong this time around. <\/p>\n\n\n\n

While management did previously note that difficulties in systems migration led to some lost orders during Jan and Feb, turnover is still worth monitoring moving forward in order to gauge the effects of price increases on demand. Lastly, core earnings were further supplemented by a one-time reduction in the effective tax rate (-340 bps).<\/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>