in-depth-analysis FDC

A Little Bit of Sugar Goes a Long Way

Filinvest Development Corporation (FDC) found its earnings decreasing by 42.51 percent year on year into 2.20-B, a change from the development tendencies in the prior quarters. Unlike the majority of its recorded peers, FDC did not bill the steepest decrease in Q2 of 2020, because it had been during that period the company realized a one-time deconsolidation profit amounting to 2.925-B.

The tendencies between its key business segments stayed relatively the same as the beginning of the year. FDC’s home company, including restaurants, residential, office, and hospitality beneath FHC, continuing double-digit declines in earnings as a result of pandemic and following quarantine steps.

Banking unit EW saw steady increase in interest earnings the previous 3 quarters, however, bottomline was hauled by bullish provisioning. Electricity ops saw reduced amounts and thus lower earnings because of weaker demand towards the pandemic.

FDC’s sugar operations beneath PSHC was the sole business that remained afloat. Revenues from this section have been able to maintain above average development. With sugar contribution gradually increasing, FDC has been able to partly cushion the adverse operation of the company’s relatively poorer companies.

For this season, our estimates suggests that a single-digit bottomline decrease for FDC — contrary to the typical double-digit drop for the majority of conglomerates under our policy. This is supposing FDC will see substantial quarter-on-quarter comeback in 4Q20 from the previous quarter -43% earnings loss.

Recommendation

We are issuing a HOLD recommendation on the stock with a target price of 9.90 per share. 

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