{"id":323785,"date":"2023-06-21T23:56:10","date_gmt":"2023-06-21T15:56:10","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323785"},"modified":"2023-06-21T23:56:12","modified_gmt":"2023-06-21T15:56:12","slug":"stock-in-focus-san-miguel-food-beverage-inc-fb-21-june-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-san-miguel-food-beverage-inc-fb-21-june-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: San Miguel Food & Beverage, Inc. (FB) – 21 June 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>FB<\/td><\/tr>
Company Name<\/strong><\/td>San Miguel Food & Beverage Inc.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 47.60<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set our target price (TP) for FB at Php47.60 based on our discounted cash flow (DCF) valuation which is driven by EBITDA. We estimate a 10-year EBITDA CAGR of ~12% on a 2023 EBITDA forecast base of Php66.2 billion, 6% higher year-on-year (y\/y). At a Target Price of Php47.60, the implied 2023 Price-Earnings (PE) ratio of 11.9x is lower than its 5-year historical PE of 25.2x and lower than the current median of its closest peers at 19.0x.<\/p>\n\n\n\n

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

1Q 2023 Performance Recap<\/strong><\/p>\n\n\n\n

San Miguel Food & Beverage, Inc. (FB) reported 1Q 2023 attributable net income of Php5.6 billion, 8% lower y\/y. Consolidated net sales rose 12% y\/y to Php93.2 billion driven by strong volumes from San Miguel Brewery (SMB) and a Php1.5 billion one time gain from the sale of Ginebra San Miguel\u2019s (GSMI) Don Papa Rum to Diageo. Gross Profit was down 2% y\/y to Php23.3 billion on a 3.6ppts margin contraction to 25% mainly due to higher raw material costs. Consolidated EBITDA improved 10% y\/y to Php17.2 billion on a sustained EBITDA margin of 19%.<\/p>\n\n\n\n

Resurgence of SMB<\/strong><\/p>\n\n\n\n

SMB or the brewery segment booked Php38.3 billion in revenues, 29% higher y\/y on a 26% increase in sales volume to 62.6 million cases. Domestic business soared as on-premise sales and resumption of tourism activities boosted sales volume by 26% y\/y and topline by 28% y\/y. The International operations grew 27%, driven by stronger Export business and various Asian region operations. GPM declined by 296bps to 35.1% mostly due to higher raw materials cost although absolute gross profit climbed 19% y\/y to Php13.5 billion on better sales volume. EBITDA ended 27% higher y\/y to Php10.2 billion and translated to net income growth of 38% y\/y to Php6.8 billion.<\/p>\n\n\n\n

GSMI buoyed by the sale of Don Papa Rum<\/strong><\/p>\n\n\n\n

GSMI or the spirits division recorded a 3% growth y\/y in revenues to Php12.9 billion as volumes fell 5% to 11.5mn cases as a result of the price increase implemented last Feb 2023. Higher input costs have led GSMI\u2019s gross profit to end 6% lower to Php3.0bn as GPM corroded 205bps to 23.5%. EBITDA and net income were 73% and 81% higher y\/y to Php3.5 billion and Php2.5 billion, respectively. However, this is mainly due to a Php1.5 billion gain from the transfer of Ginebra San Miguel\u2019s (GSMI) product rights in Don Papa Rum to a subsidiary of Diageo. Excluding this, net income would have been down 26% y\/y to Php1.0 billion. <\/p>\n\n\n\n

Foods division a drag due to higher raw material costs<\/strong><\/p>\n\n\n\n

Revenues of San Miguel Foods were sustained with a 3% growth y\/y to Php41.9 billion due to the price increases implemented from last year, but overall volumes were down as the high inflationary environment curbed consumer spending. Gross profit was down 26% y\/y to Php6.8 billion as margins were heavily slashed by higher costs, ending 6.45ppts lower to 16.3%. As a result, EBITDA was down 43% to Php3.5 billion and net income plummeted 81% to Php524 million.<\/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>