{"id":327225,"date":"2024-03-22T00:12:17","date_gmt":"2024-03-21T16:12:17","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327225"},"modified":"2024-03-22T00:56:25","modified_gmt":"2024-03-21T16:56:25","slug":"stock-in-focus-emperador-inc-emi-22-march-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-emperador-inc-emi-22-march-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Emperador Inc. (EMI) – 22 March 2024 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>EMI<\/td><\/tr>
Company Name<\/strong><\/td>Emperador Inc.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>22 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 21.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We retain our target price (TP) for Emperador, Inc. (EMI) at Php21.50 as we wait for its 2023 earnings report. Meanwhile, we upgrade our rating from HOLD to BUY on account of the unwarranted share price deterioration of 16.5% year-to-date (YTD) as fundamentals remain stable and unchallenged from the last 9-months (9M) 2023 earnings report. As its competitors have reported relatively positive profits for the year, we believe that EMI\u2019s earnings should trend similarly to its peers. Moreover, we believe that easing inflation, lowering cost of raw materials, and higher growth potential of its whisky segment increase the potential of EMI to grow significantly in the long term, and are thus undervalued. EMI\u2019s share price upside is now more attractive at 23.4%.<\/p>\n\n\n\n

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

China\u2019s anti-dumping probe continues<\/h3>\n\n\n\n

China\u2019s anti-dumping probe on French brandy, which accounts for 99.8% of all EU brandy exports, continues with China\u2019s ministry selecting Martell & Co, Societe Jas Hennessy & Co, and E. Remy Martin & Co as sample companies for the investigation. The Bureau National Interprofessionnel du Cognac (BNIC) stated that the companies selected will actively cooperate with the probe on confidence that their products and practices fully comply with Chinese and international standards and regulations. China remains an opportunity for other alcoholic beverage companies, including EMI, to strengthen their hold in the Chinese market.<\/p>\n\n\n\n

Earnings recap<\/h3>\n\n\n\n

EMI posted 9 20M23 attributable net income of Php6.8 billion, 6% lower y\/y, below expectations. Consolidated revenues rose 10% to Php47.1 billion driven by the whisky segment. Sales mix has been in line with management expectations to grow whisky versus brandy to 50:50; now at 59:41 (prev. 63:37). <\/p>\n\n\n\n

Gross profit climbed 19% to Php17.1bn on a margin expansion of 2.5ppts to 36.2% owing to higher topline and cheaper raw materials used in the brandy segment (+3.5ppts to 29.9% margin). Operating income was only 4% higher to Php9.5bn as margins declined 1.2ppts to 20.2% on higher (+43%) operating expenses; mainly on A&P spent, labour costs, and interest expenses (higher EURIBOR rate).<\/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>