{"id":324966,"date":"2023-09-21T00:02:00","date_gmt":"2023-09-20T16:02:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324966"},"modified":"2023-09-20T23:46:02","modified_gmt":"2023-09-20T15:46:02","slug":"stock-in-focus-emperador-inc-emi-21-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-emperador-inc-emi-21-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Emperador Inc. (EMI) – 21 Sept 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>EMI<\/td><\/tr>
Company Name<\/strong><\/td>Emperador Inc.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 22.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We set our Target Price (TP) for EMI at Php22.50 per share using the Discounted Cash Flow (DCF) method of valuation, mainly driven by a 9.0% 10-year EBITDA CAGR forecast. <\/p>\n\n\n\n

EMI is the leading Philippine (PH) brand in the brandy segment with 98.7% domestic volume market share and 76.6% combined market share, including imported brandy, as of the end of 2022. We believe that EMI will be able to preserve its solid foothold in the brandy segment. We also highly recognize the promising prospects for its whisky segment, which has shown rising revenue share by the year. With a potential share price upside of 7.9% and dividend yield of 1.4%, EMI deserves a HOLD rating, in our view.<\/p>\n\n\n\n

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

Growing whisky; mature brandy<\/strong><\/p>\n\n\n\n

The share of the whisky segment in EMI\u201fs total revenues has grown to 35% in 2022, +7 ppts over 5 years, and we expect this to rise further to 38%\/40% in 2023\/2024 until it reaches 50% by FY28F. We get the cue from the premiumisation trend in the international market and the expansion activities undertaken by EMI’s whisky distilleries like the Dalmore Distillery expansion, which is scheduled for completion by mid-2024, and the Invergordon Distillery, which is planning to build additional warehouses for whisky maturation. On the flip side, the brandy segment\u201fs revenue share may drop more to 62%\/60% in 2023\/2024. The market saturation and stiffer competition in brandy explain the growth bias in favor of whisky.<\/p>\n\n\n\n

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

We forecast a flattish 2023 net income attributable at Php10.1 billion and grow 7% to Php10.8 billion in 2024 on higher topline and better margins. We estimate 2023\/2024 revenues to increase 7%\/6% year-on-year (y\/y) to Php66.9 billion\/ Php70.8 billion, driven by whisky. We also estimate 2023\/2024 GP to increase 5%\/10% to Php22.2 billion\/24.4 billion as blended margins recover to the 33%-34% level and this would trickle down to EBITDA, which we forecast at Php14.5 billion\/Php15.5 billion, 4%\/9% higher y\/y.<\/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>