{"id":330550,"date":"2024-11-21T11:26:34","date_gmt":"2024-11-21T03:26:34","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330550"},"modified":"2024-11-21T11:34:41","modified_gmt":"2024-11-21T03:34:41","slug":"stock-in-focus-philippine-seven-corp-sevn-21-nov-2024-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-philippine-seven-corp-sevn-21-nov-2024-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Philippine Seven Corp. (SEVN) – 21 Nov 2024 by Regina Capital Development Corp."},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>SEVN<\/td><\/tr>
Company Name<\/strong><\/td>Philippine Seven Corp.<\/td><\/tr>
Broker<\/strong><\/td>Regina Capital Development Corp.<\/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 83.30<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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SEVN\u2019s spike in performance is attributed to its steadfast recovery coming from pandemic period of 2020 and 2021 by which SEVN suffered losses. SEVN flourishes in the post pandemic period as consumption recovers and improves from pre-pandemic levels. However, the Philippines presents a mixed economic picture, with GDP growth slowing to 5.2% and inflation rising to 2.3%. While the broader economy shows signs of slowing, the growth in consumer spending suggests a recovery in consumption. This trend could bode well for SEVN, as improving consumer confidence may drive demand. Still, the rising inflation and lower GDP growth signal potential risks, requiring cautious optimism moving forward.<\/p>\n\n\n\n

We recommend a BUY rating on SEVN with a target price of P83.30 per share, which presents an appealing upside potential of +14.11% from its last traded price.<\/p>\n\n\n\n

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

SEVN Delivers in the 1st half (1H) 2024<\/strong><\/p>\n\n\n\n

SEVN reported a +19.1% increase in merchandise sales revenue for 1H 2024, reaching P39.3 billion, with a corresponding +20.7% rise in the cost of goods sold. Despite this, merchandise gross margin declined due to lower sales of alcoholic beverages. For the 2Q24 alone, revenue from merchandise sales grew by +18.4%. Net income saw a strong +10.3% increase in 2Q24 to P1.12 billion, driven by a 7.4% growth in same-store sales, higher foot traffic, and better-than-expected performance from new stores. For 1H24, net income increased +14.0% to P1.76 billion. The company\u2019s earnings from franchisees and service income were also noted, with
a focus on the company\u2019s share of franchisee profits.<\/p>\n\n\n\n

Merchandise Sales Up, Margins Down<\/strong><\/p>\n\n\n\n

SEVN reported a +19.1% increase in merchandise sales for 1H24 to P39.3 billion, compared to P33.0 billion last year. However, the cost of merchandise sold rose by +20.7% to P29.0 billion, resulting in a decline in merchandise gross margin to 27.4% for 2Q24 and 26.2% year-to-date (YTD). The decrease in margin was linked to a lower sales contribution from alcoholic beverages. Merchandise sales also included P560.5 million from five grocery branches, which are part of the overall sales. Franchise revenue grew by +8.3% to P3.1 billion, driven by a +16.8% increase in the Company’s share of gross profit from franchisees, which reached P2.5 billion. Additionally, rent income increased due to the timing of short-term lease agreements with franchisees.<\/p>\n\n\n\n

Store network update<\/strong><\/p>\n\n\n\n

As of Sep 30, 2024, SEVN has successfully expanded its store network to a total of 4,022 locations, exceeding its original target of 4,000 stores by the fourth quarter of 2024. The network spans across the Philippines, with 454 stores in Mindanao, 593 in the Visayas, 1,116 in Metro Manila, and 1,859 in Luzon. To further accelerate its growth, SEVN is continuing its expansion efforts with a substantial investment of P5.5 billion in capital expenditures (CAPEX). This funding will support the opening of 500 new stores, with the ambitious goal of reaching 4,600 locations by 2025.<\/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>