Profit taking drags URC shares despite rubbing alcohol foray

INVESTORS opted to pocket gains last week, pulling back Universal Robina Corp.’s (URC) share price despite its announcement of its foray into rubbing alcohol production.

A total of 11.35 million shares worth P1.64 billion were traded from Nov. 23-27, placing URC as the 13^th most traded issue, data from the Philippine Stock Exchange (PSE) showed.

The Gokongwei-led food company closed at P142 apiece on Friday, declining by six percent from its Nov. 20 closing price of P151 each. Since the start of the year, the stock inched up by 0.5%.

“URC’s move downward [last] week may have mostly been sentiment driven, as investors chose to take profits off the table after the overall market’s upward move during the past few weeks,” Darren T. Pangan, trader at Timson Securities, Inc., said in a Viber message.

“The downtrend that we saw from URC [last] week was more of a reflection of market sentiment as a whole, rather than something specific to the company’s fundamentals,” Regina Capital Development Corp. equity analyst Anna Corenne M. Agravio said in an e-mail.

URC announced on Tuesday it is diversifying its product offering to include two pharmaceutical-grade alcohol brands: Shield+ and Biosure.

This rubbing alcohol line will be handled by URC’s agro-industrial and commodities division and will be supplied by its distillery in La Carlota, Negros Occidental.

The Biosure brand is already being sold as of this month, while Shield+ will begin distribution in December.

This venture is good for the company as the coronavirus pandemic has boosted demand for these products, Ms. Agravio said. However, this development “barely dented the overall market correction from its preceding highs.”

URC’s attributable net income for the first nine months went up by 7.2% to P7.50 billion from P7.27 billion last year.

In terms of negative profit shocks brought by the pandemic, URC is among few industries that were least affected, Ms. Agravio said.

“From this narrative, we can conclude that URC’s growth will be sustained for the next one or two years — demand for its products will remain stable enough to ensure at least single-digit net income growth,” she said.

“In the coming months, we may have to observe how consumer spending on basic food and beverages plays out as we go through the present COVID-19 (coronavirus disease 2019) situation,” Mr. Pangan said.

He placed the immediate support price level for URC at P140 each, while resistance level is seen at P155 apiece.

“We’ll have to see [this] week if P140 holds, otherwise, its next support area is at P130,” Mr. Pangan added.

For Ms. Agravio, she expects URC’s “closest and most reliable” support level at P139.50, its 50-day moving average, with resistance ranging between P148 and P150. — Ana Olivia A. Tirona