STOCK PICK: COSCO CAPITAL (COSCO) Holding company of Lucio Cos - - PowerPoint PPT Presentation

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STOCK PICK: COSCO CAPITAL (COSCO) Holding company of Lucio Cos - - PowerPoint PPT Presentation

Oct 31, 2022 313 likes •419 views

STOCK PICK: COSCO CAPITAL (COSCO) Holding company of Lucio Cos business interests A diversified conglomerate with exposure in retail, property development, liquor distribution, oil and mining business Currently on expansion mode,

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STOCK PICK: COSCO CAPITAL (COSCO)

  • Holding company of Lucio Co’s business interests
  • A diversified conglomerate with exposure in retail,

property development, liquor distribution, oil and mining business

  • Currently on expansion mode, set to acquire and

merge with existing players; enter into new sectors: LPG retail, and likely, banking

  • An alternative domestic retail play; trading at discount
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COSCO Company Structure

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STOCK PICK: COSCO CAPITAL (COSCO)

  • PUREGOLD PRICE CLUB

(PGOLD) is 51% owned; biggest income contributor to COSCO

  • Operates 228 stores in 52

cities and 56 municipalities across the country

  • Combined net selling area of

390,000 sqm

  • Share price hit by sagging

margins, intense retail competition

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STOCK PICK: COSCO CAPITAL (COSCO)

  • LIQUOR DISTRIBUTION: 100%
  • wned by COSCO; third

largest income contributor

  • Operates three units: Premier

Wine & Spirits, Montosco, and Meritus Prime

  • Distribute popular liquor and

non-liquor brands such as Jack Daniels, Jose Cuervo, Perrier Water and Red Bull among others

  • Entered the brandy segment to

compete with EMP

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STOCK PICK: COSCO CAPITAL (COSCO)

  • REAL ESTATE OPERATIONS:

100% owned by COSCO, second largest income contributor

  • Through six companies, it
  • perates and leases

commercial properties (buildings, land, malls) located mostly in Metro Manila

  • Its tenants include Puregold,

S&R warehouse, Abenson, etc

  • Most valuable property is in

Bonifacio Global City

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STOCK PICK: COSCO CAPITAL (COSCO)

  • Retail operations (PGOLD)

accounted for 57% of COSCO income in 1H14, despite a 7% decline y-o-y

  • Real estate income grew 23% y-
  • -y in 1H14 on higher sales and

contribution from new retail

  • utlets (NE Pacific)
  • Liquor income increased 16% y-
  • -y on higher sales, new brands

for distribution

  • May see a bigger income pie due

to more M&A and entry into new business segments

1H14 Income mix 4% 13% 26% 57%

Retail Real Estate Liquor Others

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STOCK PICK: COSCO CAPITAL (COSCO)

  • In 2014, COSCO acquired 100% of Office Warehouse,

a school and office supplies retailer

  • Acquired 360 Pharmacy, a drug retailer
  • Bought at least 90% of Liquigaz Phils Corp, an LPG

retailer of US$80m; it holds a 31% LPG market share

  • Owner Lucio Co agrees to buy 49.99% in PB Com, a

bank, for PhP7.9bn; may be folded-in to COSCO in future

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COSCO: VALUATION

% ownership Price (P) shares (m) Value (Pm) Attributable Value (Pm) NAV per share (P) Puregold Real estate Liquor Oil and Mining Retail LPG Net cash (debt) PB Com fold in* Total 51% 33.55 2,766 92,813 47,335 6.39 100% 21,006 21,006 2.84 100% 10,452 10,452 1.41 100% 3,200 3,200 0.43 90% 3,520 3,168 0.43 81,993 11.50 2,777 0.37 50% 33.00 478 15,774 7,887 1.07 87,937 12.94

  • Based on estimated market value sum-of-the-parts NAV, COSCO is

valued at PhP11.87 per share, including the recently acquired retail LPG business

  • Possible fold-in of PB Com could add PhP1.07 NAV per share
  • At current levels, COSCO is steeply undervalued relative to target price
  • f PhP12.94, offering a 63% upside
  • Risks: weaker PGOLD margins, poor execution of M&As
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STOCK PICK: COSCO CAPITAL

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END OF PRESENTATION