{"id":323850,"date":"2023-06-27T00:37:43","date_gmt":"2023-06-26T16:37:43","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323850"},"modified":"2023-06-27T00:37:45","modified_gmt":"2023-06-26T16:37:45","slug":"stock-in-focus-century-pacific-foods-inc-cnpf-27-june-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-century-pacific-foods-inc-cnpf-27-june-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Century Pacific Foods, Inc. (CNPF) – 27 June 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>CNPF<\/td><\/tr>
Company Name<\/strong><\/td>Century Pacific Foods, Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>27 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 26.90<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

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.<\/p>\n\n\n\n

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

Retail price growth weakens on the back of food<\/strong><\/p>\n\n\n\n

Retail prices in Metro Manila for May grew at their slowest pace in 11 months, coming in at only 4.9%. On a month-on month (MoM) basis, the trend also looked encouraging with the acceleration in prices flattening out to 0.2%. The cooldown in the index is mainly attributable to the Food ncomponent which saw its slowest year-to-date (YTD) increase at only 10.0%.<\/p>\n\n\n\n

Increased affordability to benefit food manufacturer CNPF<\/strong><\/p>\n\n\n\n

As prices of food items continue to grow at a milder and more consumer-friendly pace, we believe that CNPF is in a strong position to further expand sales volumes and topline. Demand for its core products (canned meat and tuna) is very price elastic, and as such weakening food inflation should allow the company to both recapture some of the market share it lost in canned tuna, as well as further grow its customer base. <\/p>\n\n\n\n

Canned products aside however, the segment which we feel most excited about is CNPF\u2019s powdered milk category. The market potential for this is significant given that domestic demand far outstrips the supply that local production can provide. According to a recent report published by the DOA, per-capita milk consumption in the PH comes in at 15.66 liters, 120x that of the of per-capita milk production (0.13 liters). In 1Q 2023, local production further shrunk by 11.4%, something that should further highlight the supply and demand disparity moving forward. As the population continues to grow, the need for milk products will continue to increase, paving the way to appetizing growth for CNPF\u2019s Birch Tree brand.<\/p>\n\n\n\n

Strong ROE prospects<\/strong><\/p>\n\n\n\n

Given the company\u2019s strong 1Q 2023 Return on Equity (ROE) of 18.4% (higher than MONDE and URC), EPS growth for 2023 will likely hit at least 6.7% assuming the ROE is sustained. Given the positive outlook on its core products and milk category, however, as well as easing inflation rates which should bode well for OPEX, we feel that ROE may trend even higher QoQ. As such, EPS expansion of high single digits to low double digits is still very much in the cards. Based on our model, we expect EPS to come in at P1.55\/share (up 10.9% YoY).<\/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>