{"id":324595,"date":"2023-08-24T00:19:39","date_gmt":"2023-08-23T16:19:39","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324595"},"modified":"2023-08-24T00:19:41","modified_gmt":"2023-08-23T16:19:41","slug":"stock-in-focus-monde-nissin-corp-monde-24-aug-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-24-aug-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 24 Aug 2023 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>24 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 8.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We cut our 2023 net income forecast by 9% to Php7.1 billion on account of weaker-
than-expected 1H 2023 results and downgrade our DCF-based target price (TP) for MONDE by 9% from Php9.33 to Php8.50. Our DCF valuation is rooted in a 10- year EBITDA CAGR estimate of 15.3%. At a Target Price of Php8.50, the share price upside is still attractive at 37.5%. Thus, we retain our BUY recommendation.<\/p>\n\n\n\n

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

1H 2023 performance<\/strong><\/p>\n\n\n\n

MONDE recorded a 17% decline in its 2Q 2023 core net income to Php1.6 billion, bringing its 1H 2023 net income 14% lower to Php3.5 billion. Consolidated sales in 2Q 2023 were flattish at Php19.1 billion, which brought 1H 2023 sales only 5% higher to Php39.2 billion. Asia Pacific Branded Food & Beverage (APAC BFB) buoyed revenue growth with an 8% increase to Php32.1 billion in 1H 2023, while Meat Alternative Business (MAB) continued to drag revenue gains with a 5% decrease in sales to Php7.1 billion. Consolidated core gross profit was 6% lower to Php12.0 billion in 1H 2023 on a 3.8ppts margin shrinkage to 30.5% largely due to MAB and higher-priced locked-in raw materials. Core EBITDA was 4% lower to Php6.5 billion as margins dropped 1.7ppts to 16.5%.<\/p>\n\n\n\n

Margin assumptions reduced<\/strong><\/p>\n\n\n\n

In 1H 2023, MONDE\u2019S consolidated gross profit ended 6% lower y\/y to Php12.0 bn due to a 3.8ppts margin contraction to 30.5%. APAC BFB margins declined 2.1ppts to 31.7% primarily due to higher-priced locked-in raw materials from the previous year, while Meat Alternative Business (MAB) margins deteriorated 11.3ppts to 25.5% on weak demand and expensive raw materials. We revised our FY23\/FY24 blended margin assumptions to 30.9% (-20bps y\/y) \/31.6% (90bps y\/y) from 35.7%\/35.9% mainly on MAB dragging margins.<\/p>\n\n\n\n

Relying on APAC BFB for now<\/strong><\/p>\n\n\n\n

We expect the APAC BFB segment to continue to steer the company\u2019s topline growth while MAB is under restructuring. We estimate APAC BFB margins to partially recover to only 31.9%\/32.7% by the end of 2023\/2024 (previous estimates were 35.4%\/35.6%) from 31.0% in 2022, while MAB margins are not expected to recover until end-2023.<\/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>