UNIVERSAL ROBINA Corp. (URC) shares dropped last week as challenges outweighed the opening of a new flour mill in Quezon.
URC was the seventh most actively traded stock last week with 14.26 million shares worth P1.11 billion changing hands from Dec. 2-6, data from the Philippine Stock Exchange showed.
Shares of the Gokongwei-led food and beverage company closed at P76.15 apiece, 3.6% lower than the P78.95 close on Nov. 29.
For the year, the stock’s price fell 35.6% from a P118.2 close on the last trading day of 2023.
Analysts attributed the weaker week-on-week close to the lingering effects of its earnings report released on Nov. 12 and higher inflation in November.
“In our view, the recent decline in the stock price [last] week appears to be a continuation of the negative sentiment following last month’s dismal earnings. This spillover effect suggests that investors’ confidence remains fragile as concerns over its near-term prospects persist,” Jemimah Ryla R. Alfonso, equity analyst at Unicapital Securities, Inc., said in an e-mail.
For the third quarter, URC posted a net attributable income of P1.42 billion, falling 53.7% from P3.07 billion in the same period last year.
The company’s revenues likewise dropped 1.81% to P38.14 billion in the third quarter.
“It is hard to say how long the negative effects from its earnings report will last,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.
“The latest inflation data may have also added to the decline in investors’ sentiment [last] week,” Ms. Alfonso added.
Inflation quickened to 2.5% in November, as typhoons increased prices, the Philippine Statistics Authority (PSA) said on Dec. 5.
Meanwhile, the Department of Agriculture (DA) said on Dec. 1 that the opening of URC’s flour milling factory in Quezon province is seen to improve production.
Spanning 10 hectares, the plant is expected to increase URC’s flour capacity to 3,500 metric tons per day.
The DA said that the plant is expected to “play a key role in ensuring a stable and affordable supply of products.”
“While the recent capacity expansion may be viewed as a positive news for the firm, it appears that it did not provide enough padding for the continued gloomy outlook for URC [last] week. Investors remain focused on the broader challenges that the company is facing including the negative price mix, struggling feed volumes, and the drop in sugar profits,” Ms. Alfonso said.
“Our consolidated net income forecast for URC stands at P2.4B, with an expected topline growth of 6% to P168.4B,” she added.
Mr. See saw resistance at P88 and support at P70.
Ms. Alfonso pegged her support between P73-75.8 and resistance between P80.25-86.25.
“Chart-wise, URC remains in a bearish trend. A shift in bias would require the stock to recover and sustain levels above P86 in the short term,” Ms. Alfonso concluded. — Karis Kasarinlan Paolo D. Mendoza
URC shares drop on gloomy outlook despite increased production
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