INVESTORS snapped up shares in Puregold Price Club, Inc. last week with analysts attributing it to its earnings result and expectations that the tightened lockdown in the National Capital Region (NCR) and surrounding areas would increase demand for retail items.
Puregold was the eighth actively traded stock last week with a total of P1.011-billion worth of 25.351 million shares exchanged, data from the Philippine Stock Exchange showed.
Shares in the Lucio L. Co-led company closed at P40.2 apiece on Friday, up 8.6% from its March 19 closing price of P37 apiece. Year to date, its price has gone down by 2.1%.
“The imposition of NCR bubble this week can be seen to have influenced the market heavily into trading [Puregold stock] into higher prices most likely because investors interpreted the bubble to be something similar to that of the MECQ (modified enhanced community quarantine) and ECQ (enhanced community quarantine), wherein we saw the public stacked weeks-worth of pantry supplies to avoid going out frequently,” Regina Capital Development Corp. Equity Analyst Arielle Anne D. Santos said in an e-mail.
Ms. Santos said speculation of better earnings from the grocery operator also contributed to the surge in the stock’s share price.
In a separate e-mail, Mercantile Securities Corp. Analyst Jeff Radley C. See noted the stock is trading at “oversold levels” in the last few weeks.
“This prompted investors to buy the stock even before the company announced the 2020 earnings,” he said.
Puregold saw its closing price go higher the week before it reported its full-year earnings last Wednesday. From a closing price of P36.20 in March 18, it has climbed 13.3% to P41 in March 25 before dipping to P40.50 on March 26 last Friday to finish last week’s trading.
In disclosure to the stock exchange, Puregold reported an unaudited consolidated net income of P8.05 billion in 2020, an 18.9% increase from its net income of P6.77 billion in 2019. It posted net sales growth of 9.2% to P168.63 billion from P154.49 billion previously.
Puregold Stores network accounted for 73% of the company’s total revenues, while S&R Membership warehouse clubs and S&R New York Style Pizza stores contributed 27%. The company did not disclose specific figures.
The company also reported that Puregold Stores posted a same store sales growth (SSSG) of 2.4% last year, while S&R grocers recorded an SSSG of 8.7%.
Puregold has a total of 470 stores nationwide as of December 2020, including 403 Puregold stores, 20 S&R membership shopping grocers, and 46 S&R New York Style Pizza shops.
Meanwhile, lockdown restrictions have been tightened for two weeks from March 22 to April 4 as coronavirus disease 2019 (COVID-19) cases have surged. Only essential travel will be allowed to and from Metro Manila and nearby provinces, or the so-called “NCR Plus” bubble.
“For this year, we forecast the company’s topline and bottom line to grow at a 3-year CAGR (compounded annual growth rate) of 6% and 5% respectively, factoring in the likelihood that restrictions would be further eased within this year,” Regina Capital’s Ms. Santos said.
“Puregold’s support can be traced all the way back on its MA50 (moving averages over 50 days) at P37.71. Meanwhile, resistance can be seen to be around P41.85,” she added.
Mercantile Securities’ Mr. See placed the stock’s support and resistance levels at P39.50-P38 and P41.5-P44, respectively.
“We might see a lower revenue for this year due to the increasing competition of online supermarkets and COVID-19 cases,” he said. — Lourdes O. Pilar
