{"id":325125,"date":"2023-09-28T00:08:55","date_gmt":"2023-09-27T16:08:55","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325125"},"modified":"2023-09-28T00:08:58","modified_gmt":"2023-09-27T16:08:58","slug":"stock-in-focus-century-pacific-foods-inc-cnpf-28-sept-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-century-pacific-foods-inc-cnpf-28-sept-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Century Pacific Foods, Inc. (CNPF) – 28 Sept 2023 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>28 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 31.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We changed our valuation method for CNPF from Price-Earnings (PE)-based to Discounted Cash Flow (DCF)-based and accordingly adjusted our target price (TP) by 11% up from Php28.00\/share to Php31.00\/share. <\/p>\n\n\n\n

Our updated TP is mostly driven by a 10.9% 10-year FCFF CAGR forecast. We believe that CNPF will be able to maintain its performance in the latter part of the year as consumers continue to be reliant on its value for money and staple products as strong inflationary environment persists. <\/p>\n\n\n\n

Moreover, the stock\u2019s recent addition to the index spurs better investor confidence in the company. With a potential share price upside of 5.8%, and a total return potential of 7.4% inclusive of our 2023 dividend yield at 1.6%, we believe CNPF is currently fairly valued and deserves a HOLD rating.<\/p>\n\n\n\n

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

Growing with branded<\/h3>\n\n\n\n

We expect Century Pacific Food Inc. (CNPF) to maintain its performance for the rest of the year as consumers continue to be reliant on the Branded business\u2019 value for money and staple products amid high inflationary pressures. This will be supported by its emerging businesses such as; Coco Mama, unMEAT, and Goodest. Its plant-based meat alternative, unMEAT, continues to expand with its recent entrance to the Australian market.<\/p>\n\n\n\n

Earnings outlook<\/h3>\n\n\n\n

We revised our 2023\/2024 net income projections for CNPF upwards by 12%\/14% to Php6.2 billion\/7.0 billion on better operating margins. We slightly reduced our revenue forecasts by 4%\/11% to Php68.6 billion\/Php76.0 billion to account for the decline in the OEM Export segment. Gross profit followed at a 2%\/8% decline to Php16.3 billion\/Php18.3bn on margins of 23.8%\/ 24.1%. We upgraded our operating income estimates by 10%\/7% to Php7.6 billion\/Php8.6 billion on cost optimization measures.<\/p>\n\n\n\n

Earnings recap<\/h3>\n\n\n\n

CNPF booked a 10% growth in its 2Q 2023 net income to Php1.7 billion, bringing its 1st half (1H) 2023 net income growth of 8% y\/y to Php3.2 billion. 1H 2023 consolidated revenues ended 8% higher to Php33.4bn, driven by an 11% growth in the Branded business although partially offset by the 7% decline in the OEM exports. 1H 2023 gross profit grew 3% to Php7.8 billion on a 110bps margin contraction to 24.0% due to higher-priced carry-on inventories. EBITDA and operating income both tracked 10% higher to Php4.9 billion and Php4.0 billion, respectively, as cost optimization initiatives offset higher input costs.<\/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>