{"id":327296,"date":"2024-03-27T01:39:22","date_gmt":"2024-03-26T17:39:22","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327296"},"modified":"2024-03-27T01:39:24","modified_gmt":"2024-03-26T17:39:24","slug":"stock-in-focus-universal-robina-corp-urc-27-march-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-universal-robina-corp-urc-27-march-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Universal Robina Corp. (URC) – 27 March 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>URC<\/td><\/tr>
Company Name<\/strong><\/td>Universal Robina Corp.<\/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 155.61<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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The combination of better pricing and volume-expansion efforts by the company (via the acquisition of ROX sugar milling assets last year) should help maintain the growth trajectory in this high yielding business. Given these updates, we remain a BUY on URC with a consensus Target Price of P155.61.<\/p>\n\n\n\n

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

Sugar, spice, and everything nice<\/h3>\n\n\n\n

Farmgate prices of sugar hit their highest levels in 19 weeks, coming in at P2,770.7 per 50kg bag as of March 10. This is up by almost 3.0% versus the prior week, and notably higher by 16.6% versus its low point of P2,376.0 last December 24. The strengthening in prices comes amidst the SRA\u2019s approval of the limited volume purchase program that aims to temporarily siphon 300,000 mt of raw sugar from the market. <\/p>\n\n\n\n

Through this, they hope to stabilize raw sugar prices at the P2,700 mark which is noted to be the fair equilibrium price for both farmers and consumers. As such, traders have been incentivized by the SRA to purchase sugar at the P2,700 to P2,800 range, which we note presents a 4.8% premium relative to the average 4Q23 price of P2,575.20.<\/p>\n\n\n\n

Sweet dreams for URC<\/h3>\n\n\n\n

Normalization of sugar prices towards a higher level would bode well for URC given that the F&B company also happens to be the largest sugar miller and refiner in the country. Its 6 sugar mills provide a total milling capacity of 36,287 mt per day, equivalent to 21.0% of the industry\u2019s systemwide capacity. As such, we think that URC will be able to capture the bulk of the pricing benefits through its market- leading volumes and overall strong position. <\/p>\n\n\n\n

Additionally, we also note that the company\u2019s Sugar and Renewables (SURE) segment also happens to be URC\u2019s highest margin contributor with 2023 EBIT margins standing at 24.7%, 13.1ppts higher than the 11.6% of Domestic Branded Food which comes in at 2nd place. As such, even though SURE accounts for only 16.2% of total sales, its total EBIT contribution comes it an outsized 36.6%.<\/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>