{"id":330541,"date":"2024-11-21T11:14:16","date_gmt":"2024-11-21T03:14:16","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330541"},"modified":"2024-11-21T11:14:20","modified_gmt":"2024-11-21T03:14:20","slug":"stock-in-focus-puregold-price-club-pgold-21-nov-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-puregold-price-club-pgold-21-nov-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Puregold Price Club (PGOLD) – 21 Nov 2024 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>PGOLD<\/td><\/tr>
Company Name<\/strong><\/td>Puregold Price Club, Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 Nov 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 43.70<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We maintain our BUY rating for PGOLD despite the earnings miss as we see them as a major beneficiary of the improving macroeconomic backdrop. Additionally, their continued store expansions which are geared towards the growing middle class puts them in an advantageous position moving forward. Upside remains substantially high at 45.7% to our Target Price of P43.70.<\/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

PGOLD posted a 25% miss in earnings for Q3 but remained in-line vs 9-months (9M) estimates on the back of continued store expansions resulting to higher opex coupled with a more value-focused approach through the implementation of competitive pricing initiatives which albeit translated to market share volume growth alongside significant improvement in SSSG which grew by 6.7% for the third quarter, translated to a substantial decline in GPM QoQ by 200 bps to end up at 14.1% vs last quarter\u2019s 16.1%.<\/p>\n\n\n\n

A further discussion on margins<\/strong><\/p>\n\n\n\n

Aside from the factors mentioned above, we also note that PGOLD as a whole was affected by the recent mandates on minimum wage increases that started by the 2nd half of last year and the new round that started this June. This pushed opex higher, effectively eating a portion of earnings, which resulted in a 100 bps YoY decline in EBITDA margins for PGOLD stores on a 9M basis. S&R stores on the other hand posted improvement in margins brought about by the more favorable foreign exchange during the quarter coupled with supply chain efficiencies and increases in product prices, this translated to a 60 bps YoY boost for its EBITDA margins to end up at 14.1% for Q3 vs same period last year\u2019s 13.5%.<\/p>\n\n\n\n

Other KPIs post growth<\/strong><\/p>\n\n\n\n

Albeit we saw some strain in margins, specifically for PGOLD stores, which was driven by heightened competition from hard discounters alongside family-ran chains, we note that PGOLD continued to post growth in its other key performance indicators (KPI). This was displayed by net sales growth of 3.5% and 4.1% for PGOLD and S&R respectively, driven primarily by increased traffic which posted growth rates of 2.2% and 1.7% coupled with a slight bump in the average basket sizes which rose by 1.3% and 2.4% respectively.<\/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>