{"id":328557,"date":"2024-07-29T02:14:33","date_gmt":"2024-07-28T18:14:33","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=328557"},"modified":"2024-07-29T02:14:34","modified_gmt":"2024-07-28T18:14:34","slug":"stock-in-focus-axelum-resources-corp-axlm-29-july-2024-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-axelum-resources-corp-axlm-29-july-2024-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Axelum Resources Corp. (AXLM) – 29 July 2024 by Regina Capital Development Corp."},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>AXLM<\/td><\/tr>
Company Name<\/strong><\/td>Axelum Resources Corp.<\/td><\/tr>
Broker<\/strong><\/td>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>29 July 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 3.75<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Given the strong earnings performance in the 1st quarter (1Q) of 2024, we recommend a BUY position on AXLM with a target price of P3.75, representing a potential upside of +78.6%.<\/p>\n\n\n\n

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

In 1Q 2024, AXLM’s net income surged by nearly +99% year-on-year (y\/y) to P106.46 million, bouncing back from the losses incurred in 1Q 2023. This significant recovery was driven by the gradual resurgence of market demand, which led to high-volume growth and improved cost management, particularly in their largest export market.<\/p>\n\n\n\n

Consequently, the 1Q 2024 topline increased by +16% y\/y to P1.58 billion. The growth was propelled by substantial volume increases across core product segments, with sales volumes rising for desiccated coconut (40%), sweetened coconut (28%), and coconut water (21%). However, this was partially offset by lower selling prices due to
market oversupply. <\/p>\n\n\n\n

The optimistic macroeconomic environment, characterized by tempering inflation and anticipated rate cuts, has fueled consumption activity, especially in AXLM’s
primary export market in Europe and the USA. The rapidly growing coconut water segment, in alignment with the robust performance of major customers, also contributed significantly to the revenue increase. <\/p>\n\n\n\n

In the European market, sales increase nearly doubled y\/y due to higher volume orders and new customer acquisitions, prompting AXLM to expand its distribution network in the region. With the bulk of revenue still coming from the U.S., AXLM anticipates sustaining its growth trajectory throughout the year, particularly with the summer season driving incremental orders from Vita Coco and the growing consumer preference for healthier products.<\/p>\n\n\n\n

The company expects continued profitability, supported by recovering demand and selling prices, alongside a new supply deal with Vita Coco. Vita Coco had provided net sales guidance for 2024 estimating up to $500-510mn (USD), garnering potential revenue growth for AXLM as their key supplier. To support its growth and expansion, AXLM plans to invest between P350mn-P400mn this year to enhance capacity, modernize equipment, and upgrade facilities. This investment is backed by the company’s authorized capital stock of P5bn, divided into 4.8bn common shares and P200mn redeemable preferred shares, and the recently renewed contract with Vita Coco until December 31, 2033.<\/p>\n\n\n\n

To recall, MPIC acquired a 34.76% stake in AXLM worth Ph5.3bn in December 2023. Despite significant losses in 1Q23, MPIC anticipates recovery following AXLM’s profitability in 1Q24, highlighting the company’s resilience. MPIC sees strong potential in AXLM’s export-focused coconut products.<\/p>\n\n\n\n

Earnings are expected to improve in the coming quarters, driven by an anticipated surge in demand in 2Q24 due to seasonality in the U.S. and expansion plans worldwide. These efforts are projected to penetrate international markets, increase demand, and enhance profit margins.<\/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>