{"id":325804,"date":"2023-11-23T13:32:39","date_gmt":"2023-11-23T05:32:39","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325804"},"modified":"2023-11-23T13:32:44","modified_gmt":"2023-11-23T05:32:44","slug":"stock-in-focus-robinsons-retail-holdings-inc-rrhi-23-nov-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-robinsons-retail-holdings-inc-rrhi-23-nov-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Robinsons Retail Holdings Inc. (RRHI) – 23 Nov 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>23 Nov 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 72.20<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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The Board of Directors of RRHI approved an extension of the company\u2019s share buyback program with an additional budget of P1.0-Billion after the program fully-utilized its P6.0-Billion budget two months ago. The share buyback program has been key to providing liquidity to the stock following its removal from the PSE index and has helped improve RRHI\u2019s per share metrics. This dedication to enhance shareholder value, along with the removal of the uncertainty over the Rose acquisition, supports our BUY rating on RRHI based on consensus Target Price of P72.20 per share.<\/p>\n\n\n\n

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

PCC clears Rose Pharmacy acquisition<\/h3>\n\n\n\n

The Philippine Competition Commission (PCC) has cleared RRHI\u2019s October 2020 100% acquisition of VisMin-based drugstore chain Rose Pharmacy. To recall, the PCC\u2019s Mergers & Acquisitions Office initiated a motu propio review of the deal in November 2022 to ensure that it will not cause RRHI to have excessive market domination in the drugstore segment. The PCC terminated the review with no recommendation for further action in October 2023, and issued a formal certification for the acquisition to proceed in early November.<\/p>\n\n\n\n

Uncertainty removed<\/h3>\n\n\n\n

The PCC\u2019s review has caused some concern over the possibility that the acquisition might be reversed. A reversal of the deal would have significant impact on RRHI\u2019s bottomline, as Rose Pharmacy accounts for 38.1% of the drugstore segment\u2019s total store count and 32.8% of its net sales. Further, the Rose acquisition allows RRHI to expand its reach into VisMin to complement its strong position in Luzon via Southstar Drug.<\/p>\n\n\n\n

High on drugstores<\/h3>\n\n\n\n

The drugstore segment delivered 6.6% same store sales growth (SSSG) in 9M 2023 as compared to RRHI\u2019s 5.0% overall SSSG. The segment\u2019s EBITDA growth of 10.3% likewise outpaced the company\u2019s consolidated EBITDA growth of 3.3% for the same period. Granted, the segment\u2019s gross margins of 21.6% is slightly lower than consolidated gross margins of 23.8%, but this is likely an effect from the lower-margin The Generics Pharmacy (TGP) and kept afloat by Southstar and Rose. This strengthens our position that Rose Pharmacy is value-accretive to RRHI and that the PCC\u2019s approval of the acquisition is a strong positive catalyst for the company\u2019s share price.<\/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>