Research group upbeat on JG Summit

MANILA, Philippines—JG Summit Holdings, the conglomerate led by John Gokongwei, is seen back in the limelight as a beneficiary of the Philippines’ strong consumption story and budding gaming and tourism sectors, research powerhouse CLSA Asia-Pacific said.

In a report dated April 12 written by analyst Jaqui Evangelista, CLSA initiated coverage of JGS with a “buy” recommendation and a 12-month target price of P43 per share based on a discounted net asset valuation.  This report boosted JGS’ share price to new highs in the stock market in the last few days.

On Friday, JGS closed at P33.50 (up 7.2 percent), giving it a market capitalization of P212.4 billion.

The report said JGS’ growth for 2012 and 2013 would largely be attributable to the continued strong performance of food unit Universal Robina Corp., property unit Robinsons Land Corp. and airline operator Cebu Air.

CLSA expects JGS’ core earnings per share to double to P2.02 this year and P3.09 next year from P1.03 in 2011.

JG Summit has been thrust back into the spotlight after the successful sale of Digital Telecommunications in October 2011 in exchange for a stake in Philippine Long Distance Telephone Co., the report said.

“Armed with a fortified balance sheet and with its focus shifted back to its core subs URC, Robinsons Land and Cebu Air, we turn bullish on JG Summit’s growth prospects in the Philippines and abroad, as well as its planned PPP [public-private partnership]) participation,” the report said.

The report said that challenging market incumbents and operational efficiency were the seals of the JGS group.

“From Gokongwei’s roots as a trader in the 1950s, JG Summit expanded into the snack foods, property, telecom and air-transport sectors, buoyed by the market’s increasing demand for more options. This opportunistic business principle has enabled JG Summit to be the giant that it is today, extending its service market beyond the Philippines to its Asean [Association of Southeast Asian] neighbors,” it said.

Armed with an investment capacity of P184 billion, CLSA noted that JG Summit was the newest PPP player that would pursue four airport projects in this year’s PPP pipeline.—Doris C. Dumlao