Puregold ‘on track’ to hit net profit target of P1.5B

MANILA, Philippines—Retailer Puregold Price Club Inc. is on track to hit its targeted net profit of at least P1.5 billion in 2011, more than double the net profit booked in 2010.

During the opening of the company’s 100th store on Monday in Taguig, Puregold president Leonardo Dayao said the company was performing in line with this year’s target and was likewise upbeat on 2012 prospects.

“We will grow next year,” Dayao said, adding that next year’s net earnings and revenues would likely top the numbers for 2011.

“Also in terms of GNP [gross national product] growth, I expect it will be better next year than this year. I think government will really go into public infrastructure and other fiscal spending that will bring more money in the hands of consumers,” he said.

A potential net profit of P1.5 billion this year will translate to P0.75 in earnings per share for Puregold, a recent stock market favorite.

Puregold shares closed on Monday at P18.20 per share, up by 3 percent from Friday’s finish. This gave the company a market capitalization of P35.3 billion.

Although Puregold’s share price initially faltered when it listed on the Philippine Stock Exchange on October 5, the stock has now surged by 45.6 percent since its P12.50-per share stock debut.

“Puregold Price Club offers a direct play into the rapidly growing Philippine wholesale and retail trade sector and ultimately the stable consumer economy. The company is rapidly expanding its portfolio of hypermarkets and supermarkets. With a fast store launch process, Puregold is effectively changing the competitive landscape of the trade sector,” said Jose Mari Lacson, head of research at stock brokerage Campos Lanuza & Co.

Based on Puregold’s plan to launch 12 more stores in 2012, Lacson said every hypermarket it would open next year could enhance the company’s fair market value by P0.22 per share.

“The main business risk is Puregold’s ability to secure land for its store expansion. However, the company’s brand awareness campaign compensates for this concern,” Lacson said.