{"id":324496,"date":"2023-08-17T00:51:32","date_gmt":"2023-08-16T16:51:32","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324496"},"modified":"2023-08-17T00:51:34","modified_gmt":"2023-08-16T16:51:34","slug":"stock-in-focus-century-pacific-foods-inc-cnpf-17-aug-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-century-pacific-foods-inc-cnpf-17-aug-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Century Pacific Foods, Inc. (CNPF) – 17 Aug 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>17 Aug 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

Given the positive revenue performance vis-\u00e0-vis that of the industry, we are considering making CNPF our top consumer pick and also upgrading its Target Price. As it currently stands, we would advise clients to BUY at lower levels.<\/p>\n\n\n\n

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

Earnings are solid<\/strong><\/p>\n\n\n\n

CNPF\u2019s profits for the first half of the year came in line with our estimates at 58.2% of 2023E figures. The 1st half (1H) of the year typically accounts for over 57% of full year results. The solid earnings were due mainly to the company\u2019s effective cost management along with accelerating revenue growth on a sequential basis, though outperformance remained a white whale as a result of difficulties in the exports side. <\/p>\n\n\n\n

Branded Business flexes its muscle<\/strong><\/p>\n\n\n\n

The company\u2019s core branded business delivered solid topline expansion of 15% in Q2, driven likely by the shelf-staples nature of CNPF\u2019s portfolio of canned marine and meat products. Demand for affordable food alternatives amidst inflation coupled with the company\u2019s marketing efforts likely served as the ace up CNPF\u2019s sleeve. This was offset however, by the weakness in the exports segment, as the business would see a contraction of 7.1%. Exports may improve somewhat as the year progresses, though we wouldn\u2019t count on a significant turnaround just yet. <\/p>\n\n\n\n

When taking a look at a per quarter basis, we note that the consolidated topline performance starts to look more impressive. Total sales for Q2 would grow by 8.8% YoY (vs 1H23 growth of 7.5%) and would further pick up the pace at 13.8% QoQ. This completely bucks the slower industry-wide revenue trend that we are seeing so far in the consumer sector amidst slowing GDP and moderating consumption. Additionally, gross margins also seem to be showing positive progression and are in fact currently tracking higher than our projections.<\/p>\n\n\n\n

Outlook<\/strong><\/p>\n\n\n\n

The company noted that gross margin improvement was due primarily to the inventory position now shifting more towards the cheaper layers. While it remains to be seen whether inventory orders from Jan to June have already been fully consumed (the period wherein skipjack tuna skyrocketed), we note that July skipjack prices have finally started to show signs of cooling. We remain wary however of supply disruptions given the contraction in the country\u2019s fisheries output, although we have noticed that CNPF\u2019s inventory position in Q2 is much stronger than what it was a year ago. Inventory-to-Sales for 2Q23 stands at 1.03x versus 0.91x in 2Q 2022.<\/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>