{"id":325007,"date":"2023-09-21T02:08:43","date_gmt":"2023-09-20T18:08:43","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325007"},"modified":"2023-09-21T02:08:44","modified_gmt":"2023-09-20T18:08:44","slug":"stock-in-focus-robinsons-retail-holdings-inc-rrhi-21-sept-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-robinsons-retail-holdings-inc-rrhi-21-sept-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Robinsons Retail Holdings Inc. (RRHI) – 21 Sept 2023 by AP 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>AP 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 76.38<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We have a BUY recommendation on RRHI with Target Price of P76.38 per share.<\/p>\n\n\n\n

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

Another Gokongwei name in the bargain bin<\/strong><\/p>\n\n\n\n

A few weeks ago, we wrote a piece on how the market was discounting URC\u2019s price at a heavily unwarranted rate. This time around, we are once again bringing up the same argument for fellow Gokongwei affiliate RRHI. The stock\u2019s price is now the lowest that it has ever been in 5 years, with yesterday\u2019s close coming in at P44.35\/share. <\/p>\n\n\n\n

At this level, we note that P\/E ratio of 11.7x is already more than 2 sds below the stock\u2019s 10 year mean. Even if one were to argue that the ratio is biased upwards by the time spent by RRHI as a PSEI member, there is still no reason for the company to be trading below pandemic lockdown P\/E levels. Consensus EPS projections are nowhere near as deep as what we saw during 2020. <\/p>\n\n\n\n

While 2023 EPS is slightly lower than last year, this is mainly due to non-operating items, aka. the interest payments on the 4.4% BPI stake that they acquired. To further highlight the stock\u2019s cheap price tag, we would also point investors to the fact that compared to its peers in emerging Asia, the stock\u2019s P\/E has also sunk to a higher-than-average discount versus comparables\u2019 mean.<\/p>\n\n\n\n

Sour sentiment on the end of the buyback program<\/strong><\/p>\n\n\n\n

Negative sentiment on RRHI sprung up as a result of the conclusion and likely non-renewal of the company\u2019s buyback program last Sept. 15. We note that cashflows will instead be reallocated towards the paying down of debt pertaining to the BPI stake. While the buyback provided value in the form of supporting RRHI\u2019s share price, the acquisition of holdings in BPI will lead to a multitude of benefits mainly in the form of strategic cooperations and synergies, as well as a steady source of cash for the company with projected annual dividends from BPI to RRHI coming in at P950-Million.<\/p>\n\n\n\n

Further injection of shareholder value awaits<\/strong><\/p>\n\n\n\n

Investors should also not forget that an additional 2.4% stake in BPI is still out there waiting to be pocketed by RRHI. This will happen as soon as the BPI-RBC merger is fully approved. Based on BPI\u2019s market cap of P525.67-Billion, a 2.4% stake would be valued at P12.62-Billion. Divided by RRHI\u2019s outstanding shares of 1.47-Billion, this would translate to added value of P8.6\/share for RRHI shareholders and could potentially be a catalyst for further share price appreciation in the future.<\/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>