{"id":322539,"date":"2023-04-05T00:58:21","date_gmt":"2023-04-04T16:58:21","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=322539"},"modified":"2023-04-05T00:58:23","modified_gmt":"2023-04-04T16:58:23","slug":"stock-in-focus-monde-nissin-corp-monde-5-apr-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-5-apr-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 5 Apr 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 Apr 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

We currently have a Target Price of P15.50\/share on MONDE. While we believe that the stock continues to hold value with its branded food business, the declining trends in the meat alternatives industry may necessitate a downward revision in the EV-to-Sales multiple which we used to value its business unit Quorn.<\/p>\n\n\n\n

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

Monde reported a net loss of P13 Billion for the year, due mainly to impairments of intangible assets in its meat alternative business following an increase in the discount rate assumption. Upon excluding this one-off, core earnings still underperformed both our (91.3%) and consensus (90%) estimates, driven by the continued decline in its meat alternative (Quorn) earnings.<\/p>\n\n\n\n

Contrary to its counterpart, the branded food business ended the year at par with our expectations despite the impact of elevated input costs. Earnings for the segment closed at P6.8 Billion, which accounted for 102% of our forecast. The main reason for this was the continued uptrend in sales, which expanded by 8.4%, although this was mostly driven by price increases (+7.7%) which were undertaken during Q1 and Q2. <\/p>\n\n\n\n

Q4 however, would see an encouraging trend of heavy volume-driven growth as revenues (when excluding the one-time PFRS15 adjustment) would shoot upwards by 15%, driven by the biscuits and noodles category, with the latter continuing to claw back market share following the pesticide fiasco earlier last year. As expected, gross margins would continue to slide due to the company\u2019s premature locking in of commodity prices, although it is important to note that Q4 cost of goods was much higher than anticipated (+14.6% QoQ), and we think that this was likely caused by the impact of the all-time high USDPHP.<\/p>\n\n\n\n

Management expects margins to finally improve beginning in 1Q 2023 as their hedging positions begin to unwind, though we note that the benefits of this may be partially offset by the costs of earlier inventories which were hit by the elevated USDPHP.<\/p>\n\n\n\n

For 2023, we expect more of the earnings growth to shift back towards the branded food business as the company has recently reallocated more of the meat alternative\u2019s CAPEX back towards branded food. This should benefit the bottomline given the business\u2019 solid sales and improving margin outlook.<\/p>\n\n\n\n

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