First Quarter 2021 (1Q21) Net Income Reached Php 336.6 Million

MAXS returned to profitability in 1Q21 after it recorded a net income of P336.6Million, a reversal of the P169.3 Million net loss in the same period a year ago. The turnaround included a P314.9 Million gain from the disposal of a subsidiary. Excluding the one-off items, MAXS incurred an P18.0 Million net loss for the three-month period. On a positive note, MAXS was able to generate a positive operating income of P145.0 Million, up 353% YoY, despite the persisting challenges in dine-in brought by various level of community quarantine. Double-digit margins make a return, with EBITDA margin and NI margin at 32.4% and 18.3%, respectively.

Marked SWS Recovery

Systemwide sales (SWS) have been steadily recovering from a low of P1.6 Billion in the second quarter of 2020 (2Q20) but took a pause in 1Q21, when SWS went down 6% quarter-on-quarter (QoQ) to P2.8 Billion, caused by the reimposition of stricter lockdown measures. Total store count stood at 667 as of end-March, down from 759 in the same period a year ago.

Recommendation

We lower our DCF-based Target Price from P7.42 to P6.61 per share but we are maintaining a BUY rating, as we expect that full-year 2021 estimated (FY21E) revenues to improve 31% year-on-year (YoY) but would translate to pre-pandemic level of 65% amid shifting business model.

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