Maybank Securities Maintains 'Buy' Call on Puregold Price Club

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Maybank Securities Maintains 'Buy' Call on Puregold Price Club
Puregold Price ClubMaybank SecuritiesInvestment
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Maybank Securities has maintained a 'buy' call on Puregold Price Club, citing positive outlook for holiday consumer spending and the company's expansion plans.

MAYBANK Securities Inc. has maintained a 'buy' call on Lucio Co-led Puregold Price Club Inc., noting that holiday consumer spending was likely to support an estimated 2024 net income growth projection of 20 percent.In a report released on Monday, Maybank said that it expected Puregold's fourth-quarter earnings 'to account for at least 30 percent of our FY (fiscal year) 2024 forecast,' noting that as of end-Sept. 2024, the retailer's net income of P6.

91 billion was already 67 percent of the 2024 net income estimate of P10.27 billion.'Following a low base in , our optimism stems from improving basket size growth and easing inflation,' it added.Maybank Securities said that it was maintaining its 2024/2025 estimated net income forecast as well as its discounted cash flow-target price of P49, which implies a 2025 estimated price-to-earnings ratio of 12.9x, as it sees a potential demand boost from the upcoming midterm elections in May.Puregold's recent acquisition of 153 Puremart stores is also expected to speed up the retailer's expansion plans, it said.Maybank noted that Puremart stores have an average size of 150 square meters, slightly smaller than a minimart, and viewed as more practical and cost efficient than Puregold stores, given that Puremart's cost per store is P2.5 million versus Puregold's capital expenditure of approximately P5 million to P6 million per Puregold store.'This acquisition will hasten expansion to compete against the growing discounter format,' the investment bank said.For 2025, Maybank estimates Puregold's topline to grow by 5 percent, driven by a forecast 3-percent/8-percent year-on-year growth for Puregold-only and S&R stores, respectively, on the back of stable basket sizes.A potential upside surprise from midterm election-related spending is also expected to boost Puregold's sales in the first half of the yea

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Puregold Price Club Maybank Securities Investment Retail Expansion

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