{"id":324579,"date":"2023-08-23T22:22:01","date_gmt":"2023-08-23T14:22:01","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324579"},"modified":"2023-08-23T22:22:36","modified_gmt":"2023-08-23T14:22:36","slug":"stock-in-focus-robinsons-retail-holdings-inc-rrhi-23-aug-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-robinsons-retail-holdings-inc-rrhi-23-aug-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Robinsons Retail Holdings Inc. (RRHI) – 23 Aug 2023 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>23 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 64.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set our target price (TP) for RRHI at Php64.00 based on Discounted Cash Flow (DCF) valuation and rate it a BUY. Despite the lower-than-expected earnings in 1H 2023 mainly due to non-core items such as higher foreign exchange losses, equitized losses from GoTyme, and higher interest expenses (mostly related to the BPI-share acquisition) we believe that the seasonally stronger 2H 2023 will help boost RRHI\u2019s earnings. <\/p>\n\n\n\n

RRHI is also currently trading cheaply at a PE of 13.1x, which is significantly below its 5-year historical PE of 22.9x albeit higher than its closest peers with a median PE of around 8.6x. We believe that RRHI deserves to trade at a higher PE than its peers due to its diversified business segments and wide-scale operations. Our Target Price of Php64.00 offers a potential share upside of 20.6% and a total return potential of 24.4% including a 2023 dividend yield of 3.8%.<\/p>\n\n\n\n

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

Earnings performance <\/strong><\/p>\n\n\n\n

Robinsons Retail Holdings (RRHI) reported 1H 2023 core net income of Php2.4 billion, 11% higher y\/y, below consensus estimates and our own forecasts. RRHI\u2019s consolidated revenues ended 10% higher y\/y to Php91.0 billion supported by a same-store sales growth (SSSG) of 6.3% and contributions from newly-opened stores. The essential store formats; supermarkets and drugstore segments alongside department stores continued to boast double-digit revenue growth. Gross profit (GP) increased by 11% to Php21.5 billion on a 20bps margin improvement to 23.7%. Operating income rose 7% to Php3.9 billion despite margins falling 10bps to 4.3% owing to higher topline. Net income attributable to the parent company declined 34% to Php1.8bn on higher forex losses and losses from associates. Interest expense from the BPI-share acquisitions in 1Q 2023 was fully offset by the dividend income from the BPI shares.<\/p>\n\n\n\n

Outlook for 2023\/2024<\/strong><\/p>\n\n\n\n

Despite RRHI\u2019s 1H 2023 earnings results falling below expectations, we believe that it will be more profitable in the latter half of the year owing to seasonally stronger demand on more public holidays in the fourth quarter (i.e. Halloween, All Soul\u2019s Day, Christmas season). Moreover, 2Q 2023 results were distorted by the higher base from last year due to benefits coming from the economic reopening and election-related spending. Nonetheless, we downgraded 2023\/2024 topline estimates by 6%\/4% y\/y to Php203.8 billion\/ Php228.5 billion and our core earnings estimates by 14%\/8% y\/y
to Php5.1 billion\/ Php6.1 billion.<\/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>