{"id":325204,"date":"2023-10-05T01:18:35","date_gmt":"2023-10-04T17:18:35","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325204"},"modified":"2023-10-05T01:19:12","modified_gmt":"2023-10-04T17:19:12","slug":"stock-in-focus-monde-nissin-corp-monde-5-oct-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-5-oct-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 5 Oct 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>5 Oct 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 9.50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We upgraded our Discounted Cash Flows (DCF)-based target price (TP) for Monde Nissin (MONDE) from Php8.50 to Php9.50 on account of the returning confidence in the Meat Alternative Business (MAB). We have adjusted our DCF valuation which was previously rooted in a 10-year EBITDA CAGR estimate of 15.3% upwards to 16.9% on higher long-term potential of both the Asia Pacific Branded Food & Beverage (APAC BFB) and MAB segments. <\/p>\n\n\n\n

At a Target Price of Php9.50, the potential share price upside lies at 8.2%. We believe that MONDE is currently fairly valued and deserves a HOLD recommendation.<\/p>\n\n\n\n

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

MAB as a long-term play<\/h3>\n\n\n\n

MONDE announced last August that it has completed the MAB restructuring and is on track to deliver its previously guided performance. This is also on top of optimism for the next quarters following improved EBITDA with 2Q 2023 ending at Php10 million vs. 1Q 2023 at negative Php116 million. We expect that MAB will be able to slowly bounce back on rising demand as inflation in its key market, the United Kingdom, continues to decelerate. <\/p>\n\n\n\n

Moreover, we believe that MONDE should be able to perform better as resurging traction in meat alternatives has revived the market as we see other market players begin to move; i.e. Century Pacific Food\u2019s (CNPF) expansion in the US and Australian markets, Berlin start-up firm Nosh.bio partnering with Ginkgo Bioworks to develop new meat alternative products, and Indonesian start-up Green Rebel to enter the Philippine meat alternatives market.<\/p>\n\n\n\n

Mass consumer looking at APAC BFB<\/h3>\n\n\n\n

We believe that as the high inflationary environment persists and consumers continue to feel the impact of high inflation from the previous quarters, consumer budget will remain tight. Value-for-money products under APAC BFB such as noodles and canned goods should elevate earnings for the rest of 2023 while other categories should also benefit from the onset of holiday spending.<\/p>\n\n\n\n

Recap: Earnings performance <\/h3>\n\n\n\n

MONDE posted a 17% decline year-on -year (y\/y) in its 2Q 2023 core net income to Php1.6 billion, ending its 1H 2023 net income 14% lower y\/y to Php3.5 billion. Its 2Q 2023 consolidated sales were flattish at Php19.1 billion, which brought 1H 2023 sales only 5% higher to Php39.2 billion. <\/p>\n\n\n\n

APAC BFB buoyed revenue growth with an 8% increase to Php32.1 billion in 1H 2023, while MAB still dragged revenues 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 contraction 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

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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>