{"id":330403,"date":"2024-11-14T00:52:02","date_gmt":"2024-11-13T16:52:02","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330403"},"modified":"2024-11-14T00:52:04","modified_gmt":"2024-11-13T16:52:04","slug":"stock-in-focus-universal-robina-corp-urc-14-nov-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-universal-robina-corp-urc-14-nov-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Universal Robina Corp. (URC) – 14 Nov 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>14 Nov 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 137.02<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Although we remain positive for URC\u2019s long-term growth prospects, the sugar-driven earnings miss for the quarter tells us that URC\u2019s bottom line would likely remain pressured until sugar prices stabilize. Despite this, we remain a CAUTIOUS BUY on URC with Target Price of P137.02.<\/p>\n\n\n\n

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

Earnings miss estimates<\/strong><\/p>\n\n\n\n

URC\u2019s core earnings for the third quarter amounted to P2.2-Billion, down 26.2% year-on-year (YoY), missing estimates significantly by 31.5% as easing sugar prices weigh on the operating profits of its Sugar and Renewables business. This was also slightly exacerbated by an increase in finance costs and taxes.<\/p>\n\n\n\n

BCF International leads the way<\/strong><\/p>\n\n\n\n

Branded Consumer Foods (BCF) sales in the Philippines for 9-months (9M) 2024 was flat at P55.9-Billion, with declines from the Coffee and Confectionery sub-segments negating the strong growth posted by their RTD Beverages and Bakery sub-segments. Downtrading persisted, as consumers continue to shift towards value-for-money offerings. <\/p>\n\n\n\n

Management mentioned several strategies that they are looking to implement to address this shift, namely through price cuts, researching new price points, and adding more value offerings. BCF International, on the other hand, posted a decent 9% YoY growth attributable to a mix in market share gains and growth in both volume and value segments.<\/p>\n\n\n\n

Sugar drags earnings yet again<\/strong><\/p>\n\n\n\n

Despite the slight rebound in sugar prices, the price level remains well below last year\u2019s highs, resulting in a massive 47% YoY decline for URC\u2019s Sugar and Renewable business. This nullified the EBIT growth posted by the AIG and Flour sub-segments, which posted YoY EBIT growth rates of 27% and 48% respectively. Aside from normalizing sugar prices, management cited higher carrying costs for the inventory and delays in milling season due to bad weather as reasons for the segment\u2019s decline. Management expects recovery as early as Q4 on the back of the beginning of the milling season.<\/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>