{"id":323306,"date":"2023-05-22T12:49:00","date_gmt":"2023-05-22T04:49:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323306"},"modified":"2023-05-23T00:49:46","modified_gmt":"2023-05-22T16:49:46","slug":"stock-in-focus-ltg-group-inc-ltg-23-may-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-ltg-group-inc-ltg-23-may-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: LTG Group, Inc. (LTG) – 23 May 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>LTG<\/td><\/tr>
Company Name<\/strong><\/td>LTG Group, Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>23 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 16.01<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Given the miss of LTG’s 1st quarter (1Q) 2023 results as well as the company\u2019s declining cashflow position, we would recommend a HOLD for now with a Target Price of P16.01 per share.<\/p>\n\n\n\n

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

While LTG\u2019s 1Q earnings showed a beefy sequential increase, we note that much of this can be attributed to the sale of Real and Other Properties Acquired (ROPA) by PNB. When stripping this out to focus on the bank\u2019s main operating performance, LTG\u2019s 1Q earnings come in at only P5.28-Billion, only 19.1% of consensus estimates which would mark an underperformance.<\/p>\n\n\n\n

The weaker-than-expected results come mainly from the continued headwinds in the tobacco segment. Earnings for PMFTC would contract by 27.6% YoY, due to a 3.1ppt contraction in market share along with volume decline which outpaced that of the industry\u2019s (-31.0% versus -27.5%). This was primarily due to the impact of inflation on consumers\u2019 wallets which led to a migration of demand towards cheaper priced competitors. A bright spot however, came in the form of the relaunched Chesterfield brand which saw volumes climb by 38.0%.<\/p>\n\n\n\n

For PNB, net interest income grew by 23.0%, as a result of the rise in rates and NIM expansion (+80bps). This was further supplemented by the 4% growth in the bank\u2019s loan book which came primarily from corporate loans. Although the deposit base dipped by 4%, the decline in time deposits (-12%) outpaced that of the CASA accounts, which also benefited NIM albeit at the cost of a higher Loans-to-Deposits ratio. Net Fee-based income also rose by 24%. <\/p>\n\n\n\n

Despite this, we note that the bank\u2019s operating expenses also surged which led to cost-to-income ballooning from 66.5% to 77.0%. As such, when factoring out the ROPA item which accounted for 22.0% of recurring revenues, PNB\u2019s net income (LTG share) only shows growth of 0.9% YoY.<\/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>