{"id":326677,"date":"2024-02-08T01:16:28","date_gmt":"2024-02-07T17:16:28","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326677"},"modified":"2024-02-08T01:16:30","modified_gmt":"2024-02-07T17:16:30","slug":"stock-in-focus-robinsons-retail-holdings-inc-rrhi-8-feb-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-robinsons-retail-holdings-inc-rrhi-8-feb-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Robinsons Retail Holdings Inc. (RRHI) – 8 Feb 2024 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>8 Feb 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 56.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We cut our target price (TP) for RRHI to Php56.00 as we rollover our valuation to 2024 estimates. Our Discounted Cash Flow (DCF) valuation is based on a 10-year EBITDA CAGR of 6.5%. Nonetheless, we believe that RRHI is still trading way below its estimated intrinsic value with a Price-Earnings (P\/E) ratio of 8.4x \u2013 even below half of its 5-yr historical P\/E of 22.8x \u2013 and provides a massive share price upside of 59.5%. Its appealing 5.8% 2024 dividend yield may also make for a positive dividend play. We reiterate a BUY rating.<\/p>\n\n\n\n

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

2023 earnings beat expectations<\/h3>\n\n\n\n

Robinsons Retail Holdings (RRHI) reported a flattish 2023 core net earnings at Php5.6 billion, above estimates. Consolidated sales rose 7% to Php192.1 billion on a blended same-store sales growth (SSSG) of 3.9%. Sales were driven by the supermarket and drugstore formats. Gross profit rose 8% to Php45.6 billion, on an 11 bps margin improvement to 23.75%, driven by assortment shifts and sustained penetration of private label brands. Operating income only grew 2% to Php8.9 billion on a margin contraction of 23bps to 4.63% on higher expenses.<\/p>\n\n\n\n

Essentials continue to drive earnings<\/h3>\n\n\n\n

Essential formats drove topline and bottomline growth with supermarkets and drugstores cumulatively growing its topline by 9% and EBITDA by 11% mainly on sustained demand, favourable sales mix, and effective cost management. Essentials comprised ~74% of sales and ~75.2% of EBITDA. Meanwhile, the discretionary format grew slower, cumulatively +4%, on weak SSSG and stiff competition, while EBITDA declined 13% on higher opex, i.e. absence of rental concession, higher labour & utilities cost.<\/p>\n\n\n\n

2024\/2025 core earnings estimates upgraded<\/h3>\n\n\n\n

We retain our 2024 core net income estimates and mildly adjust our 2025 core earnings forecasts upwards of 2% to Php6.1 billion\/Php8.0 billion as we expect equity losses from associates to lower from GoTyme\u2019s 2025 target to breakeven and the lowering BPI acquisition-related interest expenses as RRHI expects to repay ~Php2.0-3.0 billion\/year from its debt. <\/p>\n\n\n\n

However we downgrade our revenue estimates by 6%\/annum to Php215.4 billion\/ Php237.0 billion on more moderate assumptions. Gross profit estimates are also cut 6%\/ 7% to Php51.7 billion\/ Php57.4 billion on only 10bps\/20bps margin improvements to 24.0%\/24.2%.<\/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>