March 18, 2014

RRHI posts 78% growth in 2013 recurring earnings

Robinsons Retail Holdings Inc (RRHI, Not Rated) yesterday announced attributable net income of P2.7b, up 123% YoY. Taking out the impact of a change in depreciation policy, recurring net income would have still increased 78% YoY to P2.1b but short of the P2.68b consensus forecast.

EBITDA grew 63.2% to P5.2b, with overall EBITDA margin rising to 7.7% in 2013 from 5.5% in 2012. The improvement in EBITDA margin across business segments was achieved in spite of lower same-store sales growth (except for drug stores and specialty stores). Overall same-store sales growth was at 2.5% vs. 4.6% in 2012.

Our take: While RRHI is facing stiff competition in the retail sector, it has been building growth momentum through acquisitions as well as organic expansion of its units. The company is guiding for a mid- to high-teens growth in net selling area and revenues this year as well as a 40bps rise in gross margins.

This should be underpinned by its expanding geographical presence as well as contributions from recent acquisitions in the supermarket and specialty stores business segments. However, we view the continued stiff competition as potential risks to growth and margins. – WealthSec