1. AllHome [HOME 1.62, down 2.4%; 31% avgVol] [link] said, in its recent analyst briefing, that its Pet Care segment, headlined by its store format called PetBuddy, has been “booming” and has recently opened five new stores. As of June 2023, HOME reported having 10 PetBuddy stores in its network.
MB quick take: Pet care and pet products are a huge growth industry in the US, and it makes sense given the number of domestic pets (cats and dogs) that we see now around town that this segment would be something worth leaning into for somebody. It’s a little surprising to me that HOME is doing this, but maybe that’s because I don’t go to HOME stores and I don’t have a pet, but also because they don’t talk about it at all in their Quarterly Report. CTRL-F “pet” gives zero results. For a brand that is struggling as much as HOME, and a stock that’s struggling as much as HOME (down 85% from its IPO price), this feels like the kind of thing they should be mentioning and measuring at every opportunity.
2. PH Resorts [PHR 0.57 unch; 33% avgVol] [link] was crushed by interest expense in H1/23. The Dennis Uy-owned casino resort developer reported paying P1.04 billion in interest expense for the first half of 2023, which is up 1,463% from the P0.07 billion it paid in interest expense for the first half of 2022. PHR’s total liabilities increased P1.3 billion to P14 billion at the end of H1/23, but the majority of that increase was in non-current liabilities. PHR still has something like P6 billion in current liabilities, and now only has P30 million in current assets to pay those current liabilities.
MB quick take: Without near-immediate help, it’s hard to see how this is still a going concern. PHR’s current ratio is at 0.0028, and in a world where a current ratio under 1.00 could indicate trouble paying off debts in a timely manner, that’s impressive. It’s also interesting also to see Ricky Razon’s P1 billion deposit listed on the financial statements as a non-current liability called “Deposits payable”. At least DAU has until the end of 2024 to repay that debt. But at this stage, with only P5 milly in the bank, he’s going to need something really big to happen to make it work.
3. Fruitas [FRUIT 1.07, down 3.6%; 131% avgVol] [link] reported a Q2 net income of P24.3 million, up 6% y/y, on revenues of P624 million, up 37% y/y. FRUIT finished H1/23 with P1.14 billion in revenue (up 45% y/y) and P43.5 million in net income (up 48% y/y). FRUIT attributes the performance to strong same-store sales growth, its continued expansion, and the addition of Ling Nam. FRUIT has 822 across all its brands, and anticipates opening 50 more before the end of the year.
MB quick take: FRUIT was born on the PSE with a business model entirely derivative of The Old System where 100% of people need to go into a physical building to work, and nearly 100% of people do all their shopping in the same predictable locations. COVID changed all of that, first by shutting off the supply of foot traffic entirely, then by introducing wrinkles to The Old System like work-from-home, 3rd party aggregator platforms, and online shopping. FRUIT evolved to surf the waves, and that evolution (to add its own online delivery platform) gives FRUIT the ability to monetize clicks and monetize traditional foot traffic in malls and other locations. I don’t know where FRUIT goes from here, but I wonder if FRUIT’s future involves further monetization of its online platform and delivery system through tie-ups with all of the decentralized niche food brands that grew up during the COVID era.
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