Detailed analysis

Profits rose 35% year-on-year (YoY) to P3.0 Billion

PGOLD saw its full-year (FY) 2020 earnings jump 19% YoY to P8.1 Billion, which was slightly ahead of our estimates. This was supported by the 9% YoY increase in net sales to P168.6 Billion. In 4Q 2020 alone, net income of P3.0B was 82% higher on a quarter-on-quarter (QoQ) basis.

For the FY20, Puregold captured 75% of the total revenues and recorded a 5% YoY increase to P124.0 Billion. On the other hand, S&R accounted for the remaining 25% at P44.6 Billion, up 23% YoY. On a consolidated basis, EBITDA margin improved 70bps to 10.5%. Broken down, EBITDA margin for Puregold inched up 20 bps to 8.0% while S&R had a notable 110-bp increase to 17.4%.

Shifting consumer dynamics

The disruption brought by the pandemic resulted to higher average ticket size for both stores but lower foot traffic was seen mostly in Puregold stores. As of end-2020, PGOLD has 469 stores.

Recommendation

Maintain Buy rating. Share price was sanguine following the proclamation of another round of strict quarantine measures, up 18% from the latest trough of P34.20. Forward P/E of 14.3x also remains attractive vs its 5-year average of 18.8x.

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