Detailed analysis

JG Summit Holdings, Inc. (JGS)’s slipped suddenly down by -113.55% year-on-year (y/y) to -P1.82 billion in 4Q 2020, reversing its 9-month 2020 Net Income of PHP 1.36 billion. This was despite the narrower contraction seen in its topline of P54.34 billion during the same quarter versus in 3Q 2020 of -29.50% y/y.

The quarterly drop was significant to the point that its full-year performance was pushed down in the loss-making region. For FY2020 net loss of the conglomerate amounted to -P456 million, down by -101.07% y/y. Meanwhile, revenues stood at P221.60 billion, -26.60% y/y lower than the P301.91 billion recorded in 2019.

Preliminary records showed that the significantly affected CEB and petrochem units, coupled with higher fuel hedging losses and one-time impairment charge for MER, were the factors that weighed heavily on the profitability performance of JGS as whole. These overturned the bucking of the trend of URC and Rbank, both of which registered +10% y/y and +30% y/y Net Income growth in 2020. Lastly, RLC remained profit-making despite seeing a -39% y/y decline to P5.3 billion due to disruptions on its mall and hotel ops.


Weak airline and pertrochem units, coupled with higher fuel hedging losses and one-off impairment charge from MER, overturned the double-digit revenue growth seen in its banking, RLC, and URC segments, causing 4Q 2020 to record a net loss of – P1.82 billion. We maintain our HOLD recommendation with a Target Price of PHP 55.00 per share.


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