{"id":325739,"date":"2023-11-15T23:01:52","date_gmt":"2023-11-15T15:01:52","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325739"},"modified":"2023-11-15T23:01:56","modified_gmt":"2023-11-15T15:01:56","slug":"stock-in-focus-megaworld-corp-meg-15-nov-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-megaworld-corp-meg-15-nov-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Megaworld Corp. (MEG) – 15 Nov 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>MEG<\/td><\/tr>
Company Name<\/strong><\/td>Megaworld Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP 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 2.91<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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As rates begin to stabilize and we begin to see property companies\u2019 revenues in all of their segments recover, we maintain our BUY rating for MEG with a consensus Target Price of P2.91.<\/p>\n\n\n\n

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

Recovery<\/h3>\n\n\n\n

MEG\u2019s 9-month (9M) 2023 earnings at P12.02-Billion, up 43.2% year-on-year (YoY) puts its yera-to-date (YTD) earnings contribution at 75% based on consensus estimates. This highlights recovery as for the last 2 years as 9M 2021 and 9M 2022 only contributed 61% and 62% of full year earnings respectively. On a quarter basis, we also note that 3Q 2023 contribution at 26% of consensus estimates is well above the 4-year average at 22%.<\/p>\n\n\n\n

On the costs side, we note that MEG was able to lessen their Interest charges by P1.7 Billion (-28% YoY) depicting great debt management, contributing greatly to bottomline growth. Management also stated that they are not looking to book any sizeable debt in the near term given the current high rates.<\/p>\n\n\n\n

Continued demand<\/h3>\n\n\n\n

We saw real estate revenues grow by 11% YoY on the back of higher project completion rates. Alongside this is significant sales reservations growth at P109.5-Billion (+28% YoY), which management says is already 84% of their full year goal. Q3 saw launches of three projects, namely: Uptown Modern, Laurent Park, and Kensington Sky Garden which cumulatively adds P38-Billion to their inventory. Management also says that there are still projects to be launched before the year ends, displaying their favorable outlook.<\/p>\n\n\n\n

On rents<\/h3>\n\n\n\n

Combined leasing revenues of their Malls and Office segment registered 17% growth for 9M 2023. On a segmental basis, although offices showed 3% growth YoY on stable rentals and higher than industry occupancy at 89% vs Colliers\u2019 82%, we note that revenues for the segment is heavily augmented by their Malls segment which showed
revenue growth of 70% YoY on the back of higher average basket size and higher rental collections.<\/p>\n\n\n\n

Hotels and Resorts<\/h3>\n\n\n\n

Repeating the narrative on traveler resurgence, it is greatly shown on MEG\u2019s Hotels and Resorts segment as it has already surpassed FY19 revenues, given a growth of 51% YoY attributable to both local tourism and MICE activities. We also note management saying that average daily rates is already double compared to pre-pandemic levels.<\/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>