{"id":327293,"date":"2024-03-27T01:35:52","date_gmt":"2024-03-26T17:35:52","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327293"},"modified":"2024-03-27T01:35:55","modified_gmt":"2024-03-26T17:35:55","slug":"stock-in-focus-gt-capital-holdings-inc-gtcap-27-march-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-gt-capital-holdings-inc-gtcap-27-march-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: GT Capital Holdings, Inc. (GTCAP) – 27 March 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>GTCAP<\/td><\/tr>
Company Name<\/strong><\/td>GT Capital Holdings, Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>27 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 932.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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GTCAP was the only conglomerate to beat expectations in 2023, with net income coming in 14.0% above consensus estimates of P25.3-Billion for the year. This underscores our preference for GTCAP over other conglos, and we remain bullish on the stock this year as its mix of businesses aligns with our macroeconomic outlook for 2024. <\/p>\n\n\n\n

Further, GTCAP now remains as the only listed vehicle to access the MPI growth story, especially as the delisted conglo accelerates its deal-making away from the prying eyes of the public. It is also the only listed company with significant exposure to the booming automotive industry, although we do expect growth to slow in that segment this year, and for margins to narrow on less favorable forex. GTCAP is also a cheaper alternative access to MBT, as it is trading at cheaper multiples (0.57x P\/B, 5.3x P\/E) than its banking subsidiary (0.77x P\/B, 6.5x P\/E). <\/p>\n\n\n\n

Given all of the above, we remain a BUY on GTCAP based on consensus Target Price of P932.10.<\/p>\n\n\n\n

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

GTCAP core net income surge 81.5%<\/h3>\n\n\n\n

GTCAP reported that core net earnings, excluding non-recurring items from 2022 and factoring in its increased stake in MPI, reached P28.8-Billion in 2023. The conglomerate\u2019s banking (MBT), infrastructure (MPI), property (Federal Land) and automotive (Toyota) business units all posted double-digit (or in the case of Toyota, triple-digit) earnings growth to record levels.<\/p>\n\n\n\n

Macroeconomic stars align for GTCAP units<\/h3>\n\n\n\n

MBT rode the surge in consumer credit, with growth in consumer loans, up 16% year-on-year (YoY) outpacing commercial loans (+5% YoY). This segment was primarily driven by credit card loans (+26% YoY) and auto loans (+21% YoY). MBT\u2019s 8% overall loan growth, coupled with a 34bps expansion in NIMs translated to +23% YoY growth in net interest income to P105-Billion. <\/p>\n\n\n\n

Toyota rode a similar wave of consumer confidence, with sales volume reaching a record level of 200,031 units, which translates to a 24% YoY growth in revenues to P227-Billion. Toyota\u2019s earnings was further boosted by favorable forex differentials with Japan and a good models mix that leaned more heavily into higher-priced units. Federal Land also benefitted from increased affluent spending, with reservation sales mostly driven by its luxury and upscale segments.<\/p>\n\n\n\n

P32.4-Billion capex to further supercharge growth<\/h3>\n\n\n\n

The conglomerate is looking to further boost its earnings this year through a P32.4-Billion capex program, with P14.5-Billion going to the parent company for investments, acquisitions and debt repayment. The second largest slice of the pie goes to Federal Land (P5.9-Billion) to expand its property portfolio and fund its shift to developing mixed-use communities. <\/p>\n\n\n\n

Toyota will get P5.8-Billion for the production of the new generation of the best-selling classic Tamaraw FX, while Metrobank will get P5.0-Billion for IT system upgrades. The remaining balance of P1.2-Billion will be distributed among the other subsidiaries for various software and equipment upgrades. <\/p>\n\n\n\n

One thing that stands out is the P14.5-Billion budget for \u201cinvestments and acquisitions\u201d, which can be referenced to a statement from GTCAP President Carmelo Bautista in July that the group is looking to re-enter the power business. <\/p>\n\n\n\n

Notably, that budget is more than enough to buy 30% of renewable energy company CREIT, which was rumored earlier this month to be in talks with a \u201cblue chip conglomerate\u201d for the sale of a \u201clittle less than 30%\u201d stake. Could GTCAP be looking into CREIT?<\/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>