{"id":325255,"date":"2023-10-08T15:39:20","date_gmt":"2023-10-08T07:39:20","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325255"},"modified":"2023-10-08T15:39:22","modified_gmt":"2023-10-08T07:39:22","slug":"stock-in-focus-monde-nissin-corp-monde-9-oct-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-9-oct-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 9 Oct 2023 by AP 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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>9 Oct 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 9.83<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Despite the recent rally in MONDE\u2019s share price, we believe there\u2019s still upside which may even surpass the consensus Target Price of P9.83 per share. As such, we revise our rating on MONDE to BUY.<\/p>\n\n\n\n

<\/div>\n\n\n\n

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

Wheat falls near three-year low<\/h3>\n\n\n\n

Surplus harvest in Russia and higher-than-expected domestic supply and stockpiles in the United States sent wheat prices plummeting by 6% close to its three-year low on Friday, and ending the quarter down by 11%. This is the fourth consecutive quarter of losses for wheat, marking its worst run in 14 years.<\/p>\n\n\n\n

Some upside risks still remain<\/h3>\n\n\n\n

Potential escalation of the war in Ukraine that could disrupt Russia\u2019s Black Sea and Ukraine\u2019s Danube River trade routes could still trigger a supply shock in the wheat market. Russia launched attacks on Ukrainian grain ports in the Black Sea following the collapse of their trade corridor deal with Turkey and the United Nations, but so far, Ukraine has shown great restraint in not retaliating against Russia own grain ports. <\/p>\n\n\n\n

However, it remains an option for Ukraine and analysts warn that prices could go much higher if Ukraine expands its counter-offensive to the Black Sea. Prices could also rebound if hedge funds start covering their short positions in wheat futures contracts, which have risen to a three-month high based on data from CME.<\/p>\n\n\n\n

The drop in wheat prices could provide some relief on the inflation side, as this eventually translates to lower flour prices. This could speed up the pace of disinflation in the West, particularly in Europe, and also have some effect on local inflation as a key ingredient in some non-rice staples such as noodles and pandesal.<\/p>\n\n\n\n

Speaking of noodles\u2026 <\/h3>\n\n\n\n

The biggest beneficiary would obviously be noodles and biscuit maker Monde Nissin Corp. (MONDE), with wheat\/wheat flour accounting for 10-11% of the company\u2019s raw material costs. While the company said in the first half earnings update that they have already locked in their supply for the rest of the year, lower prices could present an opportunity to secure additional supply, or next year\u2019s supply, at much lower costs. This should ease the compression in MONDE\u2019s margins, and allow the company to maintain their prices, thus preventing further erosion in its market share which has been a going concern in the past few quarters.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Check how many brokers recommend this stock<\/h2>\n\n\n\n
\n
All Stock Rankings<\/a><\/blockquote>