{"id":324410,"date":"2023-08-11T00:47:24","date_gmt":"2023-08-10T16:47:24","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324410"},"modified":"2023-08-11T00:47:26","modified_gmt":"2023-08-10T16:47:26","slug":"stock-in-focus-monde-nissin-corp-monde-11-aug-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-11-aug-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 11 Aug 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>11 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Reduce<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 15.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

The quarter\u2019s earnings missed estimates by 9.4%, and while we retain our Target Price of P15.50 for now, this will be up for revision at a future date. While we have been willing to overlook the meat alternative segment\u2019s weakness as long as the core Asia-Pacific branded food and beverage business (APAC BFB) remains strong, emerging trends in the company\u2019s core business has now become a concern. As such, we are cutting our rating on MONDE from BUY to REDUCE.<\/p>\n\n\n\n

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

Quorn again, but APAC BFB was not there to cushion the blow<\/strong><\/p>\n\n\n\n

Monde Nissin Corp.\u2019s (MONDE) meat alternative business continued to weigh on its bottomline, but the company noted that Quorn has achieved a positive core EBITDA
of P10.0-Million following the completion of its planned restructuring. Unlike other quarters, MONDE\u2019s core Asia-Pacific branded food and beverage business (APAC BFB) was lacking when it comes to cushioning the blow from Quorn. <\/p>\n\n\n\n

Sales growth from APAC BFB slowed to 2.7% YoY in 2Q23, as compared to 8.0% sales growth in the full first half. APAC BFB sales growth showed a sequential decline of 5.7% from 1Q23. All told, MONDE\u2019s core net income showed a 13.1% decline QoQ and a 16.8% YoY against last year\u2019s comparable quarter.<\/p>\n\n\n\n

Rainy season upside<\/strong><\/p>\n\n\n\n

According to the company, the decline in APAC BFB reflected a broader downtrend in the food & beverage sector as inflation starts to bite and consumers reduce their basket sizes. MONDE\u2019s price increases managed to improve core gross margins from last quarter\u2019s 30.4% to 30.7%, but did little to counter higher overhead costs and lower volumes, resulting in a 180 bps decline in core gross margins on a YoY basis.<\/p>\n\n\n\n

The company expressed optimism that sales volume will pick up in Q3, on seasonally higher demand for its wet pouch noodle products during the rainy season while the resumption of classes would bolster biscuit sales. Despite this, we are concerned over the continued decline in market share across all segments, particularly in core businesses of Noodles (2Q 2023: 66.1% vs. 1Q 2023: 66.6%) and Biscuits (2Q 2023: 27.9% vs. 1Q 2023: 28.7%).<\/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>