{"id":326859,"date":"2024-02-22T11:54:00","date_gmt":"2024-02-22T03:54:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326859"},"modified":"2024-02-22T11:54:02","modified_gmt":"2024-02-22T03:54:02","slug":"stock-in-focus-puregold-price-club-pgold-22-feb-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-puregold-price-club-pgold-22-feb-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Puregold Price Club (PGOLD) – 22 Feb 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>PGOLD<\/td><\/tr>
Company Name<\/strong><\/td>Puregold Price Club, Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>22 Feb 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 64.42<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Given positive dynamics, we would recommend a BUY on PGOLD, although we would advise investors to keep their position sizes limited amidst growing competition from hard discounters.<\/p>\n\n\n\n

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

Mom and Pop revenues sizzling<\/h3>\n\n\n\n

According to a recent report by analytics startup Packworks, revenues of sari-sari stores hit higher than P8-Billion in 2023 which translated to topline expansion of 21.2%. Transaction volumes also grew by 13.9% to 8.2-Million. It should be noted that the Packworks analysts observed that the sales performance of sari-sari stores was not correlated with inflation, as consumers from rural areas with weak modern retail trade presence were more inclined to transact with these stores regardless of price levels. Volume growth was also stronger the farther away the areas were from Metro Manila.<\/p>\n\n\n\n

Growth outpacing listed retailers<\/h3>\n\n\n\n

While we still do not have any complete 2023 figures for our listed retailers, we nevertheless note that at 21.2%, topline expansion for sari-sari stores is highly likely to outpace that of our listed retailers by a wide margin based on 9M 2023 numbers. Although inflation has been trending downwards, the cost of living for many consumers remains high, and coupled with the low penetration rate of modern retail outside of Metro Manila, it is easy to see why sari-sari stores remain in strong demand amongst many people. Additionally, their close proximity to communities also makes it more convenient for people to transact with them, while also discounting the need for additional transpo expenses on these consumers\u2019 pockets.<\/p>\n\n\n\n

PGOLD reaps the most from sari-sari love<\/h3>\n\n\n\n

Given the strong demand for sari-sari stores, PGOLD should be the greatest beneficiary of this trend. Based on our estimates, the retailer through its Aling Puring program supplies to around 760,000 sari-sari stores, equivalent to 58.5% of the country\u2019s total sari-sari stores.<\/p>\n\n\n\n

With the lion\u2019s share of the market at hand, PGOLD should definitely reap the fruits of this trend. Additionally, amidst recent news of the senate\u2019s approval on a P100 wage hike for private sector workers, we note that the impact on PGOLD may be comparatively weaker versus its peers. When looking at the 9M 2023 figures, PGOLD\u2019s Labor-related OPEX-to-Sales comes in at only 4.6% of its revenues, a full 140bps lower than the second lowest which is RRHI.<\/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>