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Summary of Broker’s Recommendation
|Company Name||Century Pacific Foods, Inc.|
|Opinion Issued on||5 May 2023|
|1-Year Target Price||PHP 26.90|
The downsides to operating performance, coupled with the fact that CNPF is already trading close to our target price of P26.90, would warrant a SELL in our view.
Analysis and Opinion
The S&P Purchasing Managers’ Index (PMI) for April registered its lowest reading in 8 months at 51.4, marking a month-on-month decline of 2.1%. The main factors behind the further softening in manufacturing growth were 1.) increased competition, and 2.) milder demand.
This would obviously not bode well for the manufacturing sector as a whole, and one stock which we believe could be compromised would be CNPF. The lower volume outlook, coupled with the company’s weak pricing power would hinder its capacity to grow revenues. In addition to this, we note that the cost of the company’s primary raw material skipjack tuna has been rising steadily and is already at its highest level since 2017.
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