Investors bullish on URC after spiked spirit foray

UNIVERSAL Robina Corp. (URC) was one of the most actively traded stocks on the local stock exchange last week amid sugar shortage issues as well as its foray into alcoholic beverages.

URC was the fifteenth most traded stock last week, with P469.98 million worth of 3.8 million shares exchanging hands from Aug. 22 to 26 based on the data by the Philippine Stock Exchange.

Shares in the Gokongwei group’s food manufacturing arm went up by 3.5% to P126.30 apiece on Friday from P122 each on Thursday. Week on week, URC dipped by 0.6%. It has fallen by 2.1% since the start of the year.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in an e-mail that the news of the company’s plan to venture into alcoholic beverages made investors buy URC shares last week.

“As it is a million-dollar industry that caters to the young adults, it will definitely boost the revenue of the company as soon as it is introduced to the market,” Mr. Pangan said.

“The issue of the sugar shortage has been all over the news for the past weeks or so, and this somewhat pushed Universal Robinas’ stock price to accelerate. As of the moment, Universal Robina remains to be the largest producer of sugar in the country, and investors must have seen this as a catalyst to buy the stock,” said Jemimah Ryla R. Alfonso, equity analyst at Regina Capital Development Corp.

URC unveiled last week its Chill Spiked Spirit, which is said to have 5% double distilled alcohol, real fruit extract, and soda water, giving the drink the same alcohol strength with a more refreshing taste.

The product will be available in 330-milliliter cans at a suggested retail price of P51 each and will come in three flavors: red apple, lemon lime, and lychee.

“The new spiked spirit could help lift the company’s sales once it takes a hit on the young consumers considering Universal Robina has set a competitive price at P51.00 per can,” Ms. Alfonso said.

URC said that spiked spirits, hard seltzers, and similar beverages “have been disrupting the global beer category,” which it said to account for a 6% share of the alcoholic beverages market in the United States and is projected to soar to $3 billion by 2023.

In the first half of the year, the revenues of URC went up by about 22.9% to P71.11 billion from P57.88 billion a year ago.

Meanwhile, its attributable net income reached P6.2 billion in the six months to June, down by 23% from P8.05 billion last year.

“Universal Robina’s revenues are set to grow by the low double-digits for full year 2022, and topline could reach north of P130 billion. The firm’s performance, however, is largely dependent on how the easing of the macro headwinds would turn out,” said Ms. Alfonso.

Mr. Pangan expects the company’s revenue to hit around P143 billion for this year.

The country has been experiencing a sugar supply shortage — which is disrupting the production lines — due to the higher cost of fertilizer, weed killers, and insecticides.

Last year, the industry was severely affected by Typhoon Odette which inflicted P13.3 billion worth of farm damage, according to the Department of Agriculture.

Press Secretary Rose Beatrix Cruz-Angeles said on Aug. 18 that President Ferdinand R. Marcos, Jr., Senate President Juan Miguel F. Zubiri, and the sugar industry reached an agreement to import 150,000 metric tons (MT) of sugar.

However, the country’s sugar supply deficit is around 600,000 MT, according to Ebb Hinchliffe, executive director of the American Chamber of Commerce of the Philippines.

For this week, Ms. Alfonso expects URC’s long-term trend to be “intact” and to trade within the support and resistance levels of P120 and P127, respectively.

“Looking at the technicals, the selling pressure has been dropping alongside the momentum — which is a good sign for the bulls — as this could mean an accumulation is happening,” said Ms. Alfonso.

Mr. Pangan said that URC would continue to consolidate this week and pegged the stock’s immediate support and immediate resistance levels at P120 and P125, respectively. — Lourdes O. Pilar