Weekend Shots: MRSGI Flagship Store Operates at 95%

Is MRSGI still a promising stock? COL Financial, the Philippines’ leading online stock trading platform, released just before the weekend its Weekly Notes on subscribed stocks. In its analysis of MRSGI, it suggested that earnings of the company are seen to improve in the succeeding months brought by expected sales growth and continued ramp up of its recently opened stores.

As highlighted, Metro Ayala Cebu Department Store and Supermarket, the company’s flagship store, is already operating at 95% against the average daily sales during the month of April. The renewed operations should translate to better sales and profitability in the succeeding quarters. Equally, the two new stores opened should also perform better as foot traffic and sales gradually ramp up. As per the management, it usually takes around three years on average for its new stores to mature. MRSGI’s Metro Department stores just opened inside the same two malls during mid-1Q19. This should help boost foot traffic inside the malls and its stores.

It can be remembered that MRSGI’s 1Q19 earnings disappointed many stock investors as the company reported an 83% decline in core income (excluding the insurance claims after tax) to just PHP15M. COL Financial said that the report missed the estimates that accounted for just around 1.6% of the forecast (i.e., against the historical average 1Q contribution of 10%). However, the steep decline could be explained by operating expenses as boosted by higher rent, outpacing the growth in sales. Then again, the weakness was seen as temporary, with sales catching up in the succeeding quarters.

Metro Retail Stores Group, Inc., (PSE: MRSGI) is a Philippine publicly listed company engaged in the business of buying, selling, and trading of goods, wares, and merchandise of all kinds, targeting low to middle-income consumers. It is one of the leading retailers in the country with a market leading position in Visayas and a growing presence in Luzon.

While MRSGI remains promising in the long term, the company officers seem increasing their stock positions with the recent acquisitions of additional shares while still at a bargain. COL Financial has recorded and reported the following transactions (acquisition of shares) within the past week:

Margaret G. Ang (MRSGI Director)

• • 50,000 shares @ PHP2.50 (July 05, 2019)

Frank S. Gaisano (MRSGI Director/Chairman and Chief Executive Officer)

• • 167,000 shares @ PHP2.59 (July 09, 2019)
  • 310,000 shares @ PHP2.60 (July 09, 2019)
  • 308,000 shares @ PHP2.61 (July 09, 2019)
  • 243,000 shares @ PHP2.62 (July 09, 2019)
  • 82,000 shares @ PHP2.63 (July 09, 2019)
  • 45,000 shares @ PHP2.64 (July 09, 2019)
  • 165,000 shares @ PHP2.65 (July 09, 2019)
  • 280,000 shares @ PHP2.66 (July 09, 2019)

Vincent E. Tomaneng (MRSGI Corporate Secretary)

• • 30,000 shares @ PHP2.51 (July 09, 2019)
  • 146,000 shares @ PHP2.52 (July 09, 2019)
  • 56,000 shares @ PHP2.53 (July 09, 2019)
  • 118,000 shares @ PHP2.58 (July 09, 2019)
  • 100,000 shares @ PHP2.60 (July 09, 2019)
  • 50,000 shares @ PHP2.61 (July 09, 2019)

In a summary, the Philippine Stock Exchange Index (PSEi) rose by 23.88 points or 0.29% to end the week at 8,141.82. The continued increase for the week is amid signals that both the US Fed and the BSP could be cutting interest rates soon. Value turnover increased to PHP29.8B from PHP29.4B. Meanwhile, foreigners turned net buyers this week, accumulating Php601Mil worth of shares.