Market Event

MRSGI approves P300 Million share buyback program.

Opinion

The P300 Million buyback program currently accounts for a hefty 27.6% of MRSGI’s free float using recent closing price of P1.47 per share. While this should provide support for the stock price, the bigger question would be with regards to how aggressive will management utilize the buyback budget.

While MRSGI incurred a 9-Month 2020 net loss of P422 Million due to the recognition of a P396 Million non-recurring expense from the rationalization of its stores and workforce, we expect earnings to be net positive in full-year 2021 (FY21) as they focus on expanding their supermarket and as they shift to alternative trade channels to address high OPEX from physical stores.

We note that the share price of P1.47 represents a 41.4% discount on its third quarter 2020 (3Q20) book value of P2.51.

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