Falling behind MerryMart in P/BV ratio in a wide margin, Robinsons Retail buys 300-store Rose Pharmacy to solidify further its cash making capabilities
RRHI a cash machine
Robinson Retail Holdings, Inc. (RRHI) has been pandemic resilient. RRHI proved to be a cash machine amidst the pandemic. In the first half of 2020 (1H20) when the country suffered the worst of the lockdowns, RRHI generated cash from operations of 4 Billion Pesos that is 1.3 Billion more than what it generated in the same period last year.
Cash at RRHI has been piling up. It ended 1H20 with a cash balance of 20.4 Billion Pesos, up 18.1 Billion from the same period last year. While many companies boosted their cash balances with borrowing, RRHI didn’t. RRHI borrowed only a meager 325 Million Pesos. Total short-term loans is only at 2.6 Billion Pesos with no long-term borrowings.
On top of the 20.4 Billion cash is the pile of financial assets worth 11.7 Billion as of end of 1H20. These financial assets are mostly high-yielding bonds and some equity securities.
RRHI is using its cash pile to further boost its cash making capabilities. It is chipping away around 4.5 Billion from its cash pile to acquire the 300-store Rose Pharmacy. The acquisition will further boost its number of operating stores further solidifying its cash generation capabilities.
RRHI lags behind MM in P/BV ratio
RRHI despite being a financial fortress falls behind MerryMart (MM) in very wide margin in terms of P/BV valuation. MerryMart with just 9 operating stores as of August 8, 2020 has a P/BV valuation of 13.71 while the cash machine RRHI has only 1.43.
More room for RRHI’s valuation to grow
There is still a lot more room for RRHI’s valuation to grow. Market hasn’t realized it yet.
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Disclaimer and Disclosure: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent viewpoint. Accuretti Systems Inc. in day to day trading may have owned, or is considering buying or disposing, the shares of the companies mentioned in this commentary.