Universal Robina Corp. – Value Analysis (US OTC:UVRBF) : July 11, 2017

Capitalcube gives Universal Robina Corp. a score of 81.

Our analysis is based on comparing Universal Robina Corp. with the following peers – Tiger Brands Limited Sponsored ADR, Inventure Foods, Inc. and NightFood Holdings, Inc. (TBLMY-US, SNAK-US and NGTF-US).

Investment Outlook

Universal Robina Corp. has a fundamental score of 81 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 4.70 is about median in its peer group.
  • The market expects UVRBF-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • UVRBF-US has relatively high profit margins while operating with median asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • UVRBF-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • UVRBF-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company is likely overinvesting in a business with only median returns.
  • UVRBF-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

UVRBF-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 10.79% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 7.32%), and a well-cushioned interest coverage level of 17.00x, UVRBF-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 3 peers for the company have an outstanding debt balance.

UVRBF-US has maintained its Quick & Able profile from the recent year-end.

  • UVRBF-US‘s interest coverage is upward trending but is still within one standard deviation below its five-year average interest coverage of 39.92x.
  • Though its interest coverage increased to 17.00x from 16.26x (in 2016), its peer median remained relatively stable during this period at 8.41x.
  • UVRBF-US‘s debt-EV is its highest relative to the last five years and compares to a low of 1.66% in 2013.
  • Like the interest coverage trend, its debt-EV also increased (to 10.79% from 10.20%), while its peer median remained relatively stable during this period at 7.32%.

Access the detailed analysis for Universal Robina Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Tiger Brands Limited Sponsored ADR 3.86 1.74 22.55 166.25
Inventure Foods, Inc. 52.88 0.54 -0.17 -3.76
NightFood Holdings, Inc. 0.33 0.5 -54.16 -1160.46
Universal Robina Corp. 10.79 1.68 17 37.1
Peer Median 7.32 1.11 8.41 16.67
Best In Class 0.33 1.74 22.55 166.25

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Company Profile

Universal Robina Corp. is engaged in the manufacture and distribution of consumer food products. It operates through the following segments: Branded Consumer Foods, Agro-Industrial Products, Commodity Food Products, and Corporate Business. The Branded Consumer Foods segment manufactures and distributes salty snacks, chocolates, candies, biscuits, bakery products, beverages, instant noodles, pasta and tomato-based products. The Agro-Industrial Products segment produces and distributes an animal health products, animal feeds, glucose and soya bean products; and operates hog and poultry farm. The Commodity Food Products segment refines sugar and flour as well as manufactures pasta. Its products include savory snacks, biscuits, cakes, candies, chocolates, ready-to-drink tea and coffee; juices, bottled water, energy drinks, pure and blended coffee; creamer, instant coffee and chocolate mixes; pouch and cup noodles; canned beans, sauces and tomato paste. The Corporate Business segment engages in bonds and securities investment and fund sourcing activities. The company was founded by John L. Gokongwei Jr. on September 28, 1954 and is headquartered in Quezon City, Philippines.

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