in depth analysis meg

Net sales of PHP 8.1 billion

Revenue declined by 31 percent to php 33.3-T, largely because of a 38 percent fall in its property sector to php 19.0-T as a consequence of a low percentage of residential developments. Hotel and retail sales also decreased revenues when they ended up at 38% and 57% below PHP 1.2-B and PHP 2.0-B, respectively.

Meanwhile, office rental income slightly offset the decline as it rose 6 per cent to PHP 3.0-B for the continued service of Business Process Outsourcing tenants during the lockdown, as well as better occupancy of some of its office buildings.

As quarantine regulations are more eased resulting in an uptick in building operation, we foresee major changes in the real estate industry of MEG. However, deterioration in its malls and hotels is projected to continue through the end of the year.

In view of the 9-Month performance of MEG, the organization may miss our complete 2020 estimate of PHP 12.2 billion.

Recommendation

Buying is still recommended for MEG with a target price of PHP 5.00.

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Technical Input: MEG | October 26, 2020

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