URC 'cheapest' consumer stock, a 'buy' - Wealth

Brokerage firm Wealth Securities has retained its "buy" rating for food and beverage firm Universal Robina Corp., saying that by comparison, the Golongwei-owned company remains to be the market's cheapest consumer play. "Universal Robina Corp remains the cheapest consumer stock in the market even after meeting earnings expectations and despite encouraging prospects for next year… we are keeping our buy rating on URC," Wealth said in a note to clients. URC ended last week at P19.50 per share, at a discount compared to fast-food chain operator Jollibee Foods Corp., which closed at P41, and food and beverage giant San Miguel Corp. San Miguel A shares closed at P66, while its B shares ended at P71. Wealth said URC promises to grow 26 percent next year, boosted by improving international operations and a stronger peso. "The company is implementing or concluding certain business adjustments to address factors that weighed on earnings last year. For one, it has scaled back its rollout in China and will just focus on areas with profitable operations," Wealth said. URC has also finished tweaking its distribution system in Indonesia, which will lower its costs to 10-12 percent of sales from a previous 15-18 percent. The changes could lead to a recovery in the company's Indonesian operations, Wealth said. The broker also said that a stronger peso would ease pressures from rising freight costs and imported raw materials. Wealth also said that with a strong cash flow, URC will be able to prepay its debts set to mature in 2008. On top of this, Wealth said URC will still be able to pay out at least P1.5 billion in dividends by the third quarter of 2007. - GMANews.TV