{"id":326779,"date":"2024-02-16T01:41:20","date_gmt":"2024-02-15T17:41:20","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326779"},"modified":"2024-02-16T01:41:21","modified_gmt":"2024-02-15T17:41:21","slug":"stock-in-focus-figaro-coffee-group-fcg-16-feb-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-figaro-coffee-group-fcg-16-feb-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Figaro Coffee Group (FCG) – 16 Feb 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>FCG<\/td><\/tr>
Company Name<\/strong><\/td>Figario Coffee Group<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>16 Feb 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 1.30<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Long-term growth story intact, but downward revisions warranted. Although we continue to remain positive on FCG\u2019s long-term growth potential as a fast growing F&B play, we nevertheless note that revisions to our valuation are warranted following the disappointing earnings. We therefore advise clients to HOLD for now.<\/p>\n\n\n\n

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

FCG drops the ball<\/h3>\n\n\n\n

FCG\u2019s earnings for the first half of the year underperformed our estimates, accounting for only 42.4% of our full year forecast. Surges in raw material costs and OPEX were the primary stumbling blocks to the company\u2019s profit performance.<\/p>\n\n\n\n

Long term expansion prospects remain<\/h3>\n\n\n\n

Systemwide sales for the first half of the fiscal year rose by a solid 36.1%, and as a result, revenues continued to grow at an accelerated pace, with a scathing 42.0% increase in Q2 alone. We attribute the strong trend in the topline to the company\u2019s continued aggressiveness in its store expansion plans. For the first half of its fiscal year, FCG managed to put up 38 new stores, putting it on track to exceed our estimated 50 new stores for the year.<\/p>\n\n\n\n

Reeling from cost inflation<\/h3>\n\n\n\n

As strong as the growth in FCG\u2019s topline was in Q2, we nevertheless note that direct costs expanded at an even faster rate of 48.0% during the quarter. The primary culprit behind this was the sudden growth in the cost of FCG\u2019s raw materials. We attribute this to the impact of cost inflation as producers likely passed on more of their costs to FCG. <\/p>\n\n\n\n

Additionally, the upward trend in coffee bean prices may have also played a hand in this. To further add to the pain, OPEX continued to grow at an outsized rate of 51.9% in Q2, resulting in an overall operating margin drop of 4.1ppts.<\/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>