{"id":324860,"date":"2023-09-14T01:49:29","date_gmt":"2023-09-13T17:49:29","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324860"},"modified":"2023-09-14T01:49:30","modified_gmt":"2023-09-13T17:49:30","slug":"stock-in-focus-san-miguel-food-beverage-inc-fb-14-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-san-miguel-food-beverage-inc-fb-14-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: San Miguel Food & Beverage, Inc. (FB) – 14 Sept 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>14 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 53.20<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We raise our target price (TP) for San Miguel Food & Beverage, Inc. (FB) to Php53.20 based on our rolled-over Discounted Cash Flow (DCF) valuation rooted in our 10-yr EBITDA CAGR of 11.5% and maintain a HOLD recommendation. <\/p>\n\n\n\n

We believe that although the food division is currently dragging FB\u2019s profits on cost pressures, the firm is poised to recover by 2024 on normalizing cost base. This is further supported by its price moving upwards despite performing lower than expected as of the 1st hal,f (1H) 2023. FB is also currently trading at a PE of 12.9x, which is lower than its 5-year historical PE of 23.5x and lower than the median PE of its closest peers at 20.0x. Our Target Price offers a share price upside of 5.0% and a total return potential of 9.6%, inclusive of our 2023 dividend yield of 4.6%.<\/p>\n\n\n\n

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

Performance Recap<\/strong><\/p>\n\n\n\n

FB posted 1H 2023 consolidated attributable net income of Php10.8 billion, 14% lower year-on-year (y\/y). Consolidated revenues increased 7% y\/y to Php184.6 billion on higher sales volume and price increases. EBITDA was flattish at Php32.3 billion while operating income declined 13% to Php23.0 billion due to cost pressures from the food division. Breaking down the performance on per segment level; SMB (brewery) posted a net income of Php13.5 billion, 26% higher y\/y on higher sales in both the domestic and international business, GSMI (spirits) registered a 65% surge in net income to Php4.1 billion, including a one-time gain on the sale of Don Papa Rum rights, while San Miguel Foods reported a 72% decline in net income to Php1.7 billion on cost pressures.<\/p>\n\n\n\n

Consumers will consume<\/strong><\/p>\n\n\n\n

We believe that despite FB performing lower than expected for 1H 2023 in light of cost pressures mainly in the food division, the tempering prices of commodities in the global market will lift the firm\u2019s margins and profitability in the long run. We are bullish on the recovery of FB from 2024 onwards on (1) strong brand equity and new brand campaigns driving volume growth in the beer and spirits division, (2) recovery of volume sales in the foods division as consumers adjust to price increases implemented this year, and (3) tapering prices of commodities.<\/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>