Robinson Retail Holdings (RRHI) ended the year with a fortress balance sheet. RRHI was able to further fortify its balance sheet despite the pandemic.
RRHI holds a cash balance of 21.3 Billion Pesos at the end of the year, an increase of 1 Billion. That is after it acquired Rose Pharmacy for 4 Billion Pesos. Total sales may have decreased by 11.8 Billion to 151.1 Billion but net cash flows from operations remained strong at 7.6 Billion Pesos.
Aside from its cash hoard, RRHI can tap the debt market for any acquisition as it is free from any long -term interest bearing loans and borrowings.
While it is noticeable that RRHI increased in short-term borrowings to 9.6 Billion from 4.6 Billion such move is brilliant. Majority of those debts cost an interest of just 2.90% and most of the rest from 2.95 to 5%. While RRHI’s long-term investment in financial assets (debt securities) totaling 12.7 Billion earns it 4.38% to 7.88% per annum. Very brilliant.
RRHI has also the flexibility not to use cash for acquisition and instead use its shares as currency. RRHI is fairly valued at 26.21 P/E. Its valuation is better than its peer PGOLD with just 15.51 P/E.
Based on the characteristics of its past acquisition, there are two that fits the bill: Metro Retail Stores Group (MRSGI) which has a strong presence in the Visayas with just 4.61 Billion in market capitalization and SSI Group (SSI) of the Tantoco group with a market capitalization of just 3.99 Billion.
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