{"id":324963,"date":"2023-09-21T00:01:00","date_gmt":"2023-09-20T16:01:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324963"},"modified":"2023-09-20T23:42:09","modified_gmt":"2023-09-20T15:42:09","slug":"stock-in-focus-universal-robina-corp-urc-21-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-universal-robina-corp-urc-21-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Universal Robina Corp. (URC) – 21 Sept 2023 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 145.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We changed our valuation method for URC from Price-Earnings (P\/E) to Discounted Cash Flow (DCF)-based and accordingly adjusted our target price (TP) from Php172.00\/share to Php145.00\/share. Our revised TP is mainly driven by a 15.5% 10 year FCFF CAGR forecast. <\/p>\n\n\n\n

With seasonally stronger demand in the latter part of the year and strong brand equity, we expect URC to earn more this 2nd half (2H) versus 1st half (1H) of 2023. The potential share price upside is 25.1% while the potential total return is 27.7%,
inclusive of our 2023 dividend yield estimate of 2.6%. We retain our BUY rating.<\/p>\n\n\n\n

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

S4 Hana + new sugar mills<\/strong><\/p>\n\n\n\n

Although URC’s 1nd quarter (2Q) 2023 revenues dipped 2% on lower sales from Branded Consumer Foods (BCF) International and sugar (SURE), we expect URC to perform better in 2H 2023 driven by the BCF segment on seasonally stronger consumer demand on holiday spending. We expect the lag in the BCF Philippines (PH) due to the internal system transition to S4 Hana to be completely resolved in 2H 2023 and fill rates (~80% as of June) to improve in time for the holiday stock-piling. Moreover, we expect the recently acquired Central Azucarera Don Pedro Inc. (CAPDI) sugar milling assets and the sugar milling season starting this September to boost company earnings.<\/p>\n\n\n\n

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

We forecast a 10% year-on-year (y\/y) growth in 2023 core net income to Php13.1 billion and 14% y\/y growth in 2024 core net income to Php15.0 billion on better revenues and margins. <\/p>\n\n\n\n

We estimate 2023\/2024 revenues to increase 10% per annum to Php165.5 billion\/Php182.8 billion, respectively, driven by the BCF group. <\/p>\n\n\n\n

We estimate gross profit to rise 12% per annum to Php43.7 billion\/ Php48.9 billion with blended margins slightly up to 26.4%\/ 26.7%. <\/p>\n\n\n\n

We forecast EBITDA to climb 15%\/ 16% y\/y to Php24.8 billion\/ Php28.7 billion while EBIT jumps 18%\/18% to Php17.9 billion\/ Php21.1 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>