Robinsons Retail shares buy-back shows optimism on long-term growth
Robinsons Retail Holdings Inc. (RRHI) has bought back P15.77 billion worth of its shares from a minority shareholder, reflecting its optimism on long-term growth prospects despite volatile market conditions.
The Gokongwei-led company on Friday said it had reacquired 315.31 million common shares from GCH Investments Pte. Ltd, a subsidiary of DFI Retail Group, for P50 apiece. This represented a 22.2-percent stake in RRHI.
While this was a 31.75-percent premium over RRHI’s share price of P37.95 as of Friday afternoon, it came as a 46.81-percent discount over DFI’s buying price of P94 back in 2018.
That year, DFI acquired 18.25 percent of RRHI in a share swap deal that allowed the latter to take over Rustan Supercenters Inc. DFI, a Hong Kong-based retail firm under the Jardines Matheson Group, previously purchased Rustan Supercenters from the Tantocos.
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Two years later in 2020, RRHI also fully acquired Rose Pharmacy from DFI, expanding its drugstore footprint in the Visayas and Mindanao.
As a result, DFI got more secondary shares from the Gokongwei family and increased its shareholding in RRHI to 22.2 percent.
Current prices don’t reflect Robinsons’ growth prospects
“The ongoing share repurchase program reflects the company’s belief that current market prices do not fully reflect the underlying financial strength and long-term growth prospects of RRHI,” the company said in a disclosure to the stock exchange.
Companies typically buy back shares to raise share prices, helping boost investor confidence.
Analysts also note that buybacks are a way to signal a company’s optimism over the country’s economic prospects, especially in the retail space, which is often shielded from market volatility.
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In RRHI’s case, its share price has so far risen by 5 percent year-to-date.
“We remain firmly aligned with our commercial objectives and look forward to strengthening this collaboration in the years to come,” RRHI president and CEO Stanley Co said.
RRHI saw its earnings in the first quarter plunge by 85 percent to P760 million coming from a high base previously due to a one-time gain from the merger of Robinsons Bank and Bank of the Philippine Islands (BPI).
Excluding this gain, RRHI’s core income grew by 4.9 percent to P1.2 billion.
Meanwhile, its top line rose by 4.2 percent to P47.82 billion, buoyed by gains from the food, drugstore and department store segments. Additional selling days in March associated with the observance of the Holy Week also helped lift sales, according to RRHI.
