{"id":320265,"date":"2023-01-05T11:32:07","date_gmt":"2023-01-05T03:32:07","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=320265"},"modified":"2023-01-05T12:34:11","modified_gmt":"2023-01-05T04:34:11","slug":"stock-in-focus-monde-5-jan-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-5-jan-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 5 Jan 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>MONDE<\/td><\/tr>
Company Name<\/strong><\/td>Monde Nissin Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>5 Jan 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 15.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

At our Target Price of P15.50\/share<\/strong>, we believe that MONDE\u2019s upside of 30% is underpinned by a number of factors mainly 1.) the high expected demand for its portfolio of FMCG snack products, 2.) its hefty cash position, and 3.) the severe discounting of its branded food segment.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Analysis and Opinion<\/h2>\n\n\n\n

Around 80% of the company\u2019s revenues come from the sale of FMCG snacks, with instant noodles alone accounting for an estimated 45.8% for 2022. Given the significant share of food consumption to family expenditure (median of 36.40%) and the impact of second round inflation which is expected to continue onto next year, demand for MONDE\u2019s products should remain healthy as consumers focus their spending on affordable food sources. <\/p>\n\n\n\n

While the company\u2019s flagship Lucky Me instant noodles brand has lost some ground to competitors, it is still the dominant player with 63% market share and should be in prime position to capture this influx of demand, especially as it continues to roll out heavier value offerings. These products, such as the Milky Me variants, present more offerings to consumers (i.e., higher taste diversity) which would allow them to yield higher margins while still catering to consumers\u2019 appetite for more value for their money.<\/p>\n\n\n\n

While rising financing costs are a growing concern for businesses in 2023, we note that this is not a concern for MONDE given its significant cash position. Cash alone accounts for 13% of the company\u2019s total assets, thereby keeping net debt-to-equity below zero. This should therefore afford MONDE more than enough room to continue growing capacity while also investing in R&D in order to come up with more innovative products that would allow them to expand market share.<\/p>\n\n\n\n

Lastly, we believe that the market is severely discounting the value of MONDE\u2019s business segments. Even if the meat alternative segment were to be completely disregarded given its negative 9M 2022 core earnings, the branded food segment should still account for a value of P13.50\/share based on our 2023 EPS of P0.47\/share. <\/p>\n\n\n\n

At MONDE\u2019s previous close of 11.92, this would already translate to a discount of 14% based solely on this one business alone.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Check how many brokers recommend this stock<\/h2>\n\n\n\n
\n
All Stock Rankings<\/a><\/blockquote>