Escolar Documentos
Profissional Documentos
Cultura Documentos
August 3, 2015
Member: Philippine Stock Exchange
Company Information
Cosco Capital, Inc. (COSCO) is the holding company of tycoon Lucio L.
Co, and consolidates his interests in the following industries:
Retail
Real Estate
and Property
Leasing
Liquor
Distribution
Montosco, Inc.
Meritus Prime Distributions, Inc
Premier Wine & Spirits
Specialty
Retail
HOLD
7.40
Performance (YTD)
-14.45%
52-week range
P7.39 - P9.78
Beta
Outstanding Shares
(in millions)
Market Capitalization
(in PhP billions)
Free Float Level
0.96
7,395
P54.72
27.00%
Par Value
Sector
Holding Firms
Subsector
Major stakeholders
Holding Firms
Lucio & Susan Co
Fiscal Year
55.40%
Dec. 31
Previous Rating
n/a
Board of Directors
Chairman
Lucio L. Co
President
Leonardo B. Dayao
Susan P. Co
Directors
Eduardo F. Hernandez
Levi B. Labra
Independent Directors
st
P1.00
Robert Y. Cokeng
Oscar S. Reyes
RCDC Research
Jason Bibit
Email: jobibit@reginacapital.com
Page 1 of 7
Ownership
(%)
51.0%
Listed Firms
Puregold Price Club, Inc.
Ownership
(%)
100%
100%
90%
100%
Non-Listed Firms
Real Estate
Liquor Distribution
Specialty Retail
Parent, Oil & Mining
Ownership
(%)
100%
100%
90%
100%
Non-Listed Firms
Real Estate
Liquor Distribution
Specialty Retail
Parent, Oil & Mining
Gross NAV
Short-term debt
Long term debt
Cash & Equivalents
AFS Financial Assets (current & non-current)
Net Debt
NAV
outstanding shares (in millions)
NAV/sh
market discount
NAV/sh
Outstanding Shares
(in millions)
2,766
Closing
Price
37.00
Market Cap
(P millions)
102,341
Attributable value
(P millions)
52,194
Segment
Liabilities
6,711
1,880
1,200
8,560
Book
Value/NAV
13,277
2,242
2,535
87,566
Attributable value
(P millions)
13,277
2,242
2,281
87,566
915
490
554
(201)
Industry
P/E
48.8
22.8
27.4
5.16
Market Cap
(P millions)
44,606
11,181
15,171
(1,039)
Attributable value
(P millions)
44,606
11,181
13,654
(1,039)
Book Value
157,560
2,311
9,923
8,734
455
3,045
154,515
7,394.58
20.90
30%
P/E
121,634
2,311
9,923
8,734
455
3,045
118,589
7,394.58
16.04
30%
14.63
11.23
Segment Assets
19,988
4,122
3,734
96,126
Net Income
(annualized)
Segment analysis
100%
4%
4%
9%
4%
14%
80%
Real Estate
Revenue Breakdown
0.60
8.0
0.30
7.5
0.20
95%
6.5
86%
Market Price
79%
20%
Retail
0%
2013
2014
2015 Q1
13%
10%
10%
9%
14%
8%
6%
15%
8%
9%
67%
63%
71%
20%
Specialty Retail
0%
-3%
2013
Q1 2015
2014
Cash dividends
EPS
CONCLUSION
Profit Breakdown
60%
2014
Liquor Distribution
Specialty Retail
40%
7.0
0.10
2013
40%
80%
8.5
0.40
60%
100%
9.0
0.50
Retail
2015 Q1
-20%
Flat earnings
EPS has been generally flat since COSCO finalized its
reorganization.
Page 2 of 7
774
2013
Q1 2015
2015E
2016E
6.2%
9.4%
8.9%
10.4%
10.7%
0.53
0.54
0.54
0.63
0.71
7.6%
6.3%
5.8%
3.7%
3.7%
0.65
1.10
1.18
1.4
1.51
5.0%
7.0%
6.9%
5.3%
5.5%
82,410.4
25,155.6
57,254.8
6,235.5
286.04
6,521.5
Assets to Equity
1.4
1.5
1.4
2.0
1.4
Altman's Z-Score
2.1
6.4
7.2
n/a
n/a
Asset Income
Price to Earnings
16.7
15.9
13.7
12.3
10.9
Debt/Equity
1.0
1.5
1.2
1.2
1.2
Cost of Debt
Graham Multiplier
17.3
23.9
16.6
14.8
12.6
5.39
5.77
5.90
6.37
6.98
1.6%
4.1%
1.2%
1.4%
Dividend Yield
1.14%
COSCO is not highly leveraged, unlike most holding firms, since it does not have
a banking unit.
It said it plans to consolidate Philippine Bank of Communications into its portfolio
in the future, but for now it will be under Union Equities, Inc., Mr. Cos private
holding firm.
Low price multiples suggest that the stock is a bargain, but this may be due to the
markets perception of its owners than its fundamentals.
Despite the bearishness surrounding the stock, Altmans Z-scores are way above
the minimum range.
COSCO started to give out cash dividends last year. 2015 cash dividend as of last
week is a very enticing 4.1%. It remains to be seen if this will be the case moving
forward.
Debt Service
2013
Interest Expense
0.44
Profitability ratios have been mostly flat given its current format.
2014
in PhP millions
Interest Expense
2014
2014
LFM Inputs
Return on Assets
2014
7.91%
Debt/Equity
0.44
Cost of Debt
1.14%
ROA - CD
6.78%
Return on Equity
10.89%
9.50%
Debt/Equity
0.44
Cost of Debt
1.14%
ROA - CD
8.36%
Return on Equity
13.17%
2015 Q12
5,111
8,975
8,863
29
286
445
7.91%
179.0
31.4
19.9
EBITDA
5,804
10,435
10,433
Debt/Equity
0.53
Cost of Debt
1.14%
3,452
9,866
9,923
4.51505
4.51505
4.51505
764
2,185
2,198
5,039
8,249
8,235
ROA - CD
6.78%
Return on Equity
11.49%
7.91%
Debt/Equity
0.44
The company is not highly leveraged and could accommodate more debt if
necessary, to pursue further expansion.
Cost of Debt
0.91%
ROA - CD
7.00%
Return on Equity
10.99%
Page 3 of 7
Asset Income
Ave. Total Assets
Financial Performance
20%
Return on Equity
IV
15%
10%
2014
1Q15
5%
II
2013
Legend:
III
0%
-
1.0
2.0
3.0
4.0
5.0
I - Higher Returns,
Lower Financial Risk
IV - Higher Returns,
Higher Financial Risk
II - Lower Returns,
Lower Financial Risk
Asset to Equity
1
Perception vs. Profitability
Valuation Isoquants
20%
Return on Equity
IV
I
COSCO
Holding Firms
15%
2012
2013
2014
10%
2014
2015E
1Q15
5%
2013
II
IV Fairly valued
II Fairly valued
III Overpriced
III
0%
10
15
20
25
Price to Earnings
Operating Isoquants
15%
COSCO
2012
Holding Firms
Prof it Margin
2013
10%
2014
2012
5%
2014
1Q15
7%
6%
5%
0%
0.2
Page 4 of 7
0.4
0.6
0.8
1.0
1.2
Asset Turnover
1.4
1.6
1.8
TECHNICAL ANALYSIS
Page 5 of 7
COSCO vs PSEi
Source: www.bloomberg.com
GLOSSARY
Expected Performance
Recommendation Guide
within 1 year
BUY
The stock is a bargain relative to the PSEi or its peers; the stock has significant
long-term upside
HOLD
Neutral; the companys fundamentals are good, but interested buyers should
wait and consider buying other stocks with better upside.
+/- 10%
SELL
Take profits or cut losses; the stock does not have much upside so investors
should close their position and look for bargains.
Financial Ratios
Return on Equity
Shows how much profit a company generates with the money its shareholders have invested.
The portion of a companys profits allocated to each outstanding share of common stock.
Profit Margin
Asset Turnover
Return on Assets
Asset to Equity
Shows the companys financial leverage. It is an indicator of the overall financial stability of a company.
An indicator of a firms financial stability; It calculates the odds that a company will become bankrupt.
Altmans Z-Score
Reflects how much investors are willing to pay per dollar of earnings.
Price to Book
Reflects how many times book value investors are willing to pay for a share of the company.
Graham Multiplier
P/E Ratio x P/B Ratio; Benjamin Graham prefers companies that have a Graham Multiplier below 22.5
Dividend Yield
Shows how much a company pays out in dividends relative to its share price.
Potential retracement of a securitys original move in price. It uses horizontal lines to indicate key areas
of support or resistance (23.6%, 38.2%, 50%, 61.8% and 100%).
CEO
Maximize ROE for its shareholders
COO
CFO
Improve ROE
through operational
efficiency or ROA
Improve ROE by
maximizing debt
(reduce leverage or
cost of debt)
Disclaimer: The material contained in this publication is for information purposes only. It is not to be reproduced or copied or made available to
others. Under no circumstances it is to be considered as an offer to sell or a solicitation to buy any security. While the information herein is from
sources we believe reliable, we do not represent that it is accurate or complete and it should not be relied upon as such. In addition, we shall not be
responsible for amending, correcting or updating any information or opinions contained herein. Some of the views expressed in this report are not
necessarily opinions of Regina Capital Development Corporation.
Page 6 of 7
CONTACT US
HEAD OFFICE
Suite 806, Tower I, PSE Plaza
Ayala Ave., Ayala Triangle,
Makati City, Metro Manila
Backroom(+63) 2 848 5482 to 84
Fax
(+63) 2 848 5482
Trading Floor (+63) 2 891 9413 to 17
Available from 9:30 am to 12:00 pm, and 1:30 to 3:30 pm only.
www.reginacapital.com
rcdc@reginacapital.com
GREENHILLS
CAGAYAN DE ORO
BAGUIO
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