{"id":325484,"date":"2023-10-25T22:17:50","date_gmt":"2023-10-25T14:17:50","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325484"},"modified":"2023-10-25T22:17:51","modified_gmt":"2023-10-25T14:17:51","slug":"stock-in-focus-ltg-group-inc-ltg-25-oct-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-ltg-group-inc-ltg-25-oct-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: LTG Group, Inc. (LTG) – 25 Oct 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>25 Oct 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 12.83<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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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

Illicit tobacco losses clog solon\u2019s lungs<\/h3>\n\n\n\n

According to Albay Rep. Joey Salceda, the rampant practice of tobacco smuggling in the country is estimated to generate up to P60.6-Billion in foregone tax revenues for the country this year. Based on figures generated by the politician, cigarette excise tax collections for 2022 were down by 7.8% from P 173.9-Billion in 2021 to P160.4-Billion. Furthermore, this was short the government\u2019s target collection by P31.2-Billion. <\/p>\n\n\n\n

Illicit cigarettes pose a problem to domestic manufacturers as the absence of the excise tax allows them to sell at significantly cheaper prices compared to the legitimate products, up to 1\/5th of the original price. As such, Mr. Salceda mentioned that he would be proposing a bill aimed at addressing this problem.<\/p>\n\n\n\n

Cigarette burns on PMFTC<\/h3>\n\n\n\n

One of the biggest stakeholders currently being impacted by the illicit tobacco business is PMFTC, LTG\u2019s JV with Phillip Morris International that manufactures and distributes Marlboro and Fortune Tobacco in the country. Given that PMFTC is actually the company\u2019s largest earnings generator as of 1H 2023 at 44.8% share, recent declines in the volume of sticks sold due to shifts in demand towards cheaper priced competition has weighed heavily on the company\u2019s profits. In the 1st half (1H) of 2023, PMFTC\u2019s market share in the industry actually declined by 5.2ppts to 57.8% as a result of negative demand elasticity. <\/p>\n\n\n\n

Dividends still a satisfying chaser<\/h3>\n\n\n\n

Yet, for all the bitterness and the smoke that this piece of news leaves in the mouth, the outlook for LTG\u2019s biggest box office draw which is its dividends remains on track. According to their official website, the company is compelled to declare dividends as long as its retained earnings remain more than 100% above its paid-in capital stock. <\/p>\n\n\n\n

Based on its 1H 2023 financials, its total retained earnings amount to 3.27x its total paid-in-capital, while net cash position (excluding PNB\u2019s deposits) is actually positive. Seeing as earnings continue to get some boost from PNB\u2019s sales of reclaimed property, it is likely that the company\u2019s ability to pay out hefty dividends will continue to remain as is. <\/p>\n\n\n\n

Assuming that dividends for November remain at the P0.30\/sh mark (similar to August and May), then annualized dividend yield at yesterday\u2019s close would come in at 13.34%. However, if November dividends follow the same trajectory as last year\u2019s and also come in at P0.50\/sh, then annualized dividend yield can spike to 15.57%.<\/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>