This is why Puregold and MRSGI’s fundamentals are not priced in even after more than 50% rally from its lows
(Note this is only the author’s opinion and doesn’t reflect any views from my employer or organization I’m affiliated with)
Assume Possible Targets for $PGOLD = Php60 (30% higher) and $MRSGI =Php 3.00 (100% higher)
Key Numbers for PGOLD
- ) 423 Stores (77% PGOLD 23% S&R)
2.) GPM 16%
3.) NPM 4.1% ( S&R 8% and PGOLD 3%) — In case you’re wondering who’s hoarding — its the rich people so NPM will rise since Sales Growth comes from households stocking and hoarding 2 months worth of lockdown or 3 months worth of lockdown food. You should see the same kind of metrics being said by URC CNPF on their earnings calls.
2013 Stores of PGOLD = 215
2020 Stores of PGOLD =423
2013 Peak Price = 48 pesos
2020 Peak Price WILL NOT BE 48 Pesos. It will become 60 Pesos (valuation, and predictability of earnings)
Common sense metrics yan. Sales 200% higher than 2013
Earnings 200% higher than 2013 (Stores Increases and SSS Growth)
Marketcap at 48 after 7 Years is 15X P/E Ratio DESPITE RECORD SALES AND GROWTH for 2020 Covid time.
As of Year 2018 Puregold’s SALES is 150B pesos
As of Puregold’s 2019 Sales is annualized at around 150B pesos too
As of PGOLD’s 2020 Sales projection? Perhaps 200B pesos
(Due to hoarding, ECQ)
Sales increase = Gross Profit Increase = Earnings Increase and at 7 year prices…it’s definitely still in the bargain space knowing there’s only VERY FEW companies actually GROWING during COVID.
Puregold’s Cashflow yearly is as high as 7 Billion pesos from Operations. If it doesn’t spend for Capital expenditures.
- Consolidated Cashflows even as of 2018 for PGOLD was as much as 11.5 Billion pesos a year. EVERY YEAR If they don’t spend for an additional supermarket, they’d end up putting all that into retained earnings..but since their 2018 Retained earnings is already 30 Billion pesos, they spend 5B pesos of that in growing through adding 25 stores, adding and building more S&R stores. This is approximately 10X Price to Cash/Share Even at 46.50 EVEN AT THAT LEVEL.
Puregold practically has only SM Supermarket as its only competition (and SM Supermarket is not independently listed. You’d have to want the other businesses which are banks and properties which are cyclical)
Given that PGOLD’s marketcap vastly undermines its potential
If Walmart will continue to JUST STAY ELEVATED
PGOLD has no choice but to go UP
This is how we inferred that when Mcdonalds was rising abroad
Jollibee in the Philippines had no choice but to go up even when the sales were absent. Just by sheer franchise systems and brands
You can see the same coz when we saw Nissin rise 30% in Japan..we knew URC would follow. Staples will follow worldwide standards.
Puregold Balance Sheet Cash as of FY2018 is 10.7 Billion pesos
It’s cheap for a supermarket cashflow business even if you compare this worldwide. Php 60 is a possible target price here.
- so PGOLD has 30% upside, MRSGI has 100% upside
Even when PSEI has 0% upside
- ganon lang supermarkets.
- if PSEI goes from 5700 to 5000 PSEI drops 14%
The most Puregold can drop is to go down to 40 lets assume it follows down
but if PSEI even manages to go to 6000, PGOLD goes to 50 and easily breaks one day to all time highs
so it’s still logical that supermarkets will outperform PSEI. Less sellers, more buyers = higher prices.
GPUMP is going to go up while PSEI will either go down or go sideways
- G = Globe
P = Puregold
U = URC
M = MRSGI
P = PLDT
Only GPUMP will win at any up or down or sideways
- on up days GPUMP will PUMP higher
on down days GPUMP will fall lower
on sideways days GPUMP can go higher even better
Invest in the GPUMP — the Good Pump :D
signing out :) Follow my ideas over at Twitter @facelesstrader
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