{"id":328866,"date":"2024-08-11T12:12:10","date_gmt":"2024-08-11T04:12:10","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=328866"},"modified":"2024-08-11T12:12:12","modified_gmt":"2024-08-11T04:12:12","slug":"stock-in-focus-universal-robina-corp-urc-12-aug-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-universal-robina-corp-urc-12-aug-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Universal Robina Corp. (URC) – 12 Aug 2024 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>12 Aug 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 133.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/div>\n\n\n\n

We retain our BUY rating for Universal Robina Corp. (URC) with a target price
(TP) of Php133.00 per share. Although strong 1st quarter (1Q) 2024 earnings was offset by the 22% decline in net income in the 2nd quarter (2Q) of 2024 due to consumers shifting towards lower-priced items to cope with cyclical trends, earnings is still in-line with our estimates for 2024. <\/p>\n\n\n\n

We expect its international Branded Consumer Foods (BCF) Group to continue to perform in the 2nd half (2H) of 2024, along with BCF PH numbers to pick up amid
seasonality, easing inflation & interest rates. We consider the URC\u2019s strong market share across its businesses to become defensive from hard discounters and competitors. <\/p>\n\n\n\n

Moreover, given the sharp drop in URC\u2019s share price recently, we believe this
trend is temporary and can even be a buying opportunity for long-term investors. Should overall market sentiment stabilize and favourable macro-environment improves, URC is poised to further increase profitability and margins throughout the year.<\/p>\n\n\n\n

<\/div>\n\n\n\n

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

Earnings results<\/h3>\n\n\n\n

URC posted 1H 2024 core net income of Php6.708 billion, up 4.9% year-on-year (y\/y). Consolidated net sales rose 3.1% to Php80.75 billion, underpinned by a flattish (+1.4%) growth in the BCF segment and the strong (+7.1) growth in the Agro-Industrial Commodities (AIC) business. Gross profit was up 10.7% to Php23.02 billion with margins increased by 197bps to 28.5% due to a better mix and lower input costs. Operating income outpaced topline growth at 10% to Php9.41 billion due to the 70bps margin expansion as improvements from other segments were able to offset the impact of lower sugar prices. Meanwhile, EBITDA increased by 7% to Php12.56 billion.<\/p>\n\n\n\n

China pullout won\u2019t affect valuations<\/h3>\n\n\n\n

The company has announced its intention to pull out its China business by 2025 after seizing operations this June, where it participates in the Cereal and Snacks categories. The business has been downsized over the years, previously exiting Biscuits (2016) and Coffee (2018) due to the changing market landscape in China. We believe this move does not affect current valuations as China operations only account for <1% of total 1H24 sales and the effects of this can be outdone by URC\u2019s operations in other growing markets (Vietnam, Indonesia, Thailand, & Malaysia).<\/p>\n\n\n\n

<\/div>\n\n\n\n

Check how many brokers recommend this stock<\/h2>\n\n\n\n
\n
All Stock Rankings<\/a><\/blockquote>