ROBINSONS RETAIL HOLDINGS - A GROWING EMPIRE | Marvin Germo

ROBINSONS RETAIL HOLDINGS – A GROWING EMPIRE

By: Marvin Germo | April 1, 2018

What makes Robinson Retail Holdings a good company? 

Robinsons Retail Holdings Inc. has been operating for almost four decades now but still remains as one of the most patronized multi-format retailers in the Philippines, regardless of the evident competition against other merchandise-based companies. What makes RRHI a good company?

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Made it to Forbes!

Robinsons Retail, alongside Jollibee Foods Corp. and Puregold Price Club Inc. made it to Forbes magazine’s “Asia’s Top 50 Fab Companies” list of 2016. Note that the list, despite its name, was not just about being “fab”. Those who belonged to the list were the best-performing companies in Asia in terms of market value. Despite tough competitions, especially with more retail companies sprouting here and there, Robinsons Retail Holdings remained prominent among the public and was able to amass a market value of P2.5 billion in 2016 gaining the 39th spot in the esteemed Forbes’ list.

Impressive numbers

On a five-year scale, RRHI books an average of 15.8% increase in sales and its operating income climbs more or less 88%. RRHI cites its engagement in diverse trading goods businesses, as well as its nationwide presence, as the primary reason for its national prominence leading to sustained growth and expansion. As a matter of fact, just a week ago, Robinsons Retail reported a double-digit rise in its core net income for the fourth quarter and the entirety of 2017.

The company, run by JG Holdings, disclosed on a statement to the Philippine Stock Exchange a 15.3% increase in its net earnings going up to P1.6 billion in the fourth quarter of 2017 from P1.4 billion in the same period the year prior. This brings their full-year core net earnings up by 13.7% ending at P4.7 billion from P4.1 billion in 2016.

Robinsons, presently with a network of 1,718 stores nationwide, links the two-digit net income growth to higher net sales in 2017 following their opening of 140 new branches in the country, plus consolidated revenues from brands under its management.

Due to its full-length success in 2017, Robinsons’ share price is presently at P89.30 apiece and goes up an average of 5.37% or P4.8 on a five-day interval.

Brands managed

People might not know it but contributing to its 2017 core net income growth are well-known RRHI-managed brands including budget drugstore The Generics Pharmacy (TGP), one-stop shop Ministop, hardware and supply stores Handyman Do It Best, True Value, Topshop, and Topman, and even the iconic toy store Toys R Us. Other stores under Robinsons Retail Holdings are Daiso Japan, Costa Coffee, and Southstar Drug. Moreover, Robinsons Retail Holdings, only recently, decided to add to their ever-growing family of brands.

Because the Philippines is a consumption-driven economy and Robinsons Supermarket remains its top sales contributor, RRHI wanted to gain access to the higher end of the market. So the Gokongwei-led company decided to strike an P18 billion deal with Mulgrave Corp. B.V., a unit of London-listed Dairy Farm International Holdings Ltd., to acquire 100% stake of high-end grocery chain operator Rustan Supercenters.

Through this acquisition, Robinsons becomes the top competitor in a three-way competition among major food retailers, with an estimated P23 billion addition to their annual revenues to be generated by Rustans food retail brands. With around 60 stores nationwide, Rustans Supercenters operates Marketplace by Rustan’s, Rustan’s Supermarket, Shopwise Hypermarket, Shopwise Express, and Wellcome.

High spirits

Because of its recent acquisition of Rustans, RRHI expects a huge jump in their sales this year, hopefully, while still retaining its spot as the top-selling food retailer in a three-way rivalry against SM Retail and Puregold Price Club Inc.

People might not know it but contributing to its 2017 core net income growth are well-known RRHI-managed brands including

Bloomberg Interview

Sharing this Bloomberg interview where I where I had the chance to share bits and pieces of how good Robinsons Retail is and that it is still currently undervalued. I believe, by computing its growth rate, RRHI should be around 115 Pesos for the year.

Technical Analysis

Looking at the chart below, the stock bounced from the 84.45 support range. If you bought because of the bounce, you can now see that the stock is experiencing a resistance as it tries to go close to the 91.50 resistance. Should the stock continue to experience a hard time as it continues to progress higher, quick traders make take profits. The trigger should be its failure to breakout from 91.50. However should it breakout from 91.50, hold your positions first as the stock may go to 95 then 100.

For position traders, at this point, the stock is still bearish protected by the bearish resistance at 93. Should the stock breakout from the 93 range and it stays above it. You can start to buy and accumulate. Buy as close as you can to 93 and stay away from the stock should it go lower than 93 or it starts flying far from 93 should a breakout happen.

 

I’ll keep you posted on how this develops in the next few weeks.

New book and other books on Investing, Business and Finance.

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