The Most Loved Philippine Stock Right Now Is a Grocery

(Bloomberg) -- Philippine grocery store operator Puregold Price Club Inc. says it may post a double-digit sales increase this year despite the impact of volcanic eruptions and the coronavirus.

Consumer demand remains “robust,” supporting the company's outlook for 8%-10% revenue growth in 2020, President Ferdinand Vincent P. Co said in an e-mail. That combined with the introduction of a mobile app for online shopping and efforts to increase the sales ratio of in-house brands from 1% currently should help drive earnings expansion, he said.

The company's shares have the highest analyst rating among Philippine Stock Exchange Index components, with an average recommendation of 4.95 on a scale where a score of 5 equates to a unanimous buy. The stock rose as much as 2.2% Thursday -- it's down about 7.9% since the start of the year, holding up better than 24 of its 29 peers on the benchmark gauge.

The street's opinion on the stock climbed last year to the highest level since shortly after it listed in late 2011, backed by the consensus expectation for earnings growth to reaccelerate to 13.5% this year from 3.2% in 2019. Analysts also see the company as among the least affected by the coronavirus outbreak.

“Puregold sells staples so it shouldn't be significantly affected by the virus unlike restaurants and non-essentials,” said Rachelle Cruz, an analyst at AP Securities Inc. “Its earnings growth recovery story this year will be driven by improvement in margins” due to slower inflation and higher sales at its warehouse club store format.

Co said the company's outlook could turn down if further eruptions of the Taal volcano south of Manila are “abrupt and prolonged,” or if there is an “aggressive spread” of the coronavirus. The Philippines has been relatively unscathed by the outbreak so far, with just three confirmed cases.

While the president declined to give a profit projection for the company, he said he expects a boost from expansion of its app coverage to 100 stores by June from 30 currently, as well as the start of a delivery service for these transactions. He noted that the app has 34,000 downloads in the month since it was launched.

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Kurt Schussler, Naoto Hosoda

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