Robinsons Retail seen gaining from acquisition

Robinsons Retail Holdings, Inc.’s prospects for 2019 appear bright with investors upbeat on the firm’s prospects following additions to its portfolio, analysts said.

The Gokongwei-led firm’s share price is up just over P5 apiece since the start of 2019, on Friday adding P2.05 or 2.41 percent to P87.05 from previous day and bucking the benchmark’s Philippine Stock Exchange index’s 1.02-percent dive.

The latest close is still well below last year’s above P100/share peak but Philstocks Financials, Inc. research associate Piper Chaucer Tan claimed that investors were betting on contributions to be realized this year from Robinsons Retail’s purchase of Rustan’s supermarket chain.

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Rustan Supercenters, Inc., which operates Marketplace by Rustan’s, Rustan’s Supermarket, Shopwise Hypermarket, Shopwise Express and Wellcome, was acquired in March last year via an P18-billion share swap. Competition regulators approved the purchase in August and the deal was completed in November.

“For the catalysts, number one, as well we know, Robinsons bought Rustans … and the integration of its earnings and prospects going forward will be in 2019,” Tan said.

He claimed the “stock market has not been pricing in” developments regarding Robinsons Retail and that easing inflation would further boost the firm’s prospects for 2019, which he said would be a “turnaround year” for the retail sector.

Inflation surged to a nine-year high of 6.7 percent in September and October before slowing in the last two months of 2018 for a full-year average of 5.2 percent, above the Bangko Sentral ng Pilipinas’ 2.0-4.0 percent target. This year, monetary authorities expect average consumer price growth to hit 3.5 percent.

Timson Securities Inc. trader Jervin De Celis is also optimistic about the Rustan Supercenter deal’s impact on Robinsons Retail’s bottomline.

“I think the acquisition will have a positive impact on the operations of Robinsons given their expertise in the retail sector; they can yield better margins probably in the next 3-5 years,” he said.

De Celis, however, warned that the share for share swap would have “dilutive effect” on Robinsons Retail’s earnings per share (EPS).

“Investors can expect higher profitability once Robinsons has managed to make operational costs more efficient and the company’s EPS growth is pegged to grow at least 4.04 percent to 4.55 percent in 2019 to 2020,” he added.

For Regina Capital Development Corp. head of sales Luis Limlingan, increased sales would drive the firm’s performance this year.

“Inflation is trending lower. Rustans has higher-end products so people may now buy into them,” he explained.

Robinsons Retail saw nine-month earnings grow by 9.8 percent to P3.8 billion as of end-September last year, attributed to a 10.2-percent hike in operating income.

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