{"id":325719,"date":"2023-11-15T22:24:28","date_gmt":"2023-11-15T14:24:28","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325719"},"modified":"2023-11-15T22:24:30","modified_gmt":"2023-11-15T14:24:30","slug":"stock-in-focus-robinsons-retail-holdings-inc-rrhi-15-nov-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-robinsons-retail-holdings-inc-rrhi-15-nov-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Robinsons Retail Holdings Inc. (RRHI) – 15 Nov 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>15 Nov 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 61.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We cut our target price (TP) for RRHI by 5% from Php64.00 to Php61.00 as we adjusted the stock Beta and number of outstanding shares (share buyback) used in our DCF valuation. We believe that RRHI is trading cheaply at a PE of 11.6x, lower than its 5-year average of 23.7x and lower than its closest peer\u2019s median PE of 20.7x. Our Target Price still offers a compelling share price upside of 50.1% and a total return potential of 55.0% including a 2023F dividend yield of 4.9%. We reiterate a BUY rating.<\/p>\n\n\n\n

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

Earnings in line with estimates<\/h3>\n\n\n\n

Robinsons Retail Holdings (RRHI)’s 9-month (9M) 2023 core net income rose 4% to Php3.8 billion, in line with our estimates as it accounted for 74% of our 2023 forecast of Php5.1 billion, although behind (accounting for 67%) 2023 consensus estimates of Php5.6 billion. Consolidated net sales increased 9% y\/y to Php138.2 billion on a blended same-store sales growth (SSSG) of 5.0% and contributions of new store additions.<\/p>\n\n\n\n

Gross profit climbed 9% to Php32.9 billion, supported by a 15bps increase in blended margins to 23.8% owing to better category mix and higher penetration of private label brands. EBITDA grew at a slower pace of 3% to Php11.7 billion as margins contracted 45bps to 8.4%. EBIT grew 4% to Php6.1 billion on a 22bps margin decline to 4.4% due to higher operating costs.<\/p>\n\n\n\n

Essentials driving business<\/h3>\n\n\n\n

The core essentials format \u2013 supermarkets and drugstores \u2013 mainly drove topline growth and accounted for ~75% of RRHI\u2019s consolidated revenues as inflationary pressures persisted, leading to budget priorities for essential goods and services. Nevertheless, RRHI\u2019s topline and core net earnings were resilient amid inflationary pressures and a high base from last year due to election-related spending and the economic reopening.<\/p>\n\n\n\n

Discretionary a drag; department stores a light <\/h3>\n\n\n\n

Although most discretionary formats\u2019 sales grew y\/y, except DIY -0.7%, only the
department store segment posted growth in EBITDA at +3% to Php717 million despite a 50bps margin decline to 6.7%. <\/p>\n\n\n\n

Other discretionary formats\u2019 EBITDA took the brunt of higher operating expenses, especially on rent (removal of rental concessions), utilities, and labor.<\/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>