SMC shares get ‘buy’ ratings

San Miguel Corp. (SMC) shares earned "buy" ratings from three securities firms allowing its recent disclosure of an excellent year in 2001 as the company demonstrated the ability to establish and deliver a solid business platform for the entire Group, with a very strong potential for further growth. Giving the favorable recommendation on SMC were stockbrokers ATR King Eng, JP Morgan and UBS Warburg.

The San Miguel Group posted consolidated net sales last year of P122 billion, up 48 percent over the P82.3 billion in 2000. Revenue grew across all businesses: 48 percent in beverage, 90 percent in the food group and one percent in packaging.

Operating income reached P10.5 billion, 32 percent higher than the P7.9 billion the previous year. Consolidated net income without the acquisitions of Coca-Cola Bottlers Philippines Inc. (CCBPI) and Pure Foods Corp., would have reached P7.3 billion up seven percent from last year. But due to the short-term dilutive effects of the SMC’s acquisition of CCBPI, net income amounted to P6.5 billion against P6.8 billion in 2000.

Maintaining a "buy" recommendation on San Miguel, ATR Kim Eng Securities said it expects improved performance from the group this year due to the full year’s contributions from the businesses San Miguel acquired last year. With the recent investment of Kirin Brewery Co. Ltd. in SMC and the resulting savings, it forecast 2002 recurring net income to reach P8.5 billion.

Other brokers estimated that SMC’s earnings would reach between P7.51 billion and P9.32 billion in 2002.

JP Morgan, in giving another "buy" recommendation for San Miguel, said it believes that the benefits of the company’s acquisitions will start to flow through towards the end of 2002. SMC will show margin improvements this year, it added, noting likewise that the CCBPI acquisition will be dilutive only in the short term.