{"id":325916,"date":"2023-12-03T00:02:22","date_gmt":"2023-12-02T16:02:22","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325916"},"modified":"2023-12-03T00:02:24","modified_gmt":"2023-12-02T16:02:24","slug":"stock-in-focus-monde-nissin-corp-monde-3-dec-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-3-dec-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 3 Dec 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>3 Dec 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP .50<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/div>\n\n\n\n

We retain our DCF-based target price (TP) for Monde Nissin (MONDE) at Php9.50 and upgrade our recommendation from HOLD to a BUY following the strong performance and confidence in the APAC BFB segment, though slightly offset by a tempered long-term growth expectations in MAB. We have adjusted our valuation which was previously rooted in a 10-year EBITDA CAGR estimate of 16.9% to 17.0%. <\/p>\n\n\n\n

At a Target Price of Php9.50, the potential total return is now more attractive at 15%, including our 2024 dividend yield of 3.0%.<\/p>\n\n\n\n

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

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

MONDE beats expectations<\/h3>\n\n\n\n

Monde Nissin Corp. (MONDE) closed 9-month (9M) 2023 with a flattish (+1%) attributable core net income at Php5.7 billion, above our own and consensus estimates. Consolidated net sales grew 9% to Php56.6 billion, driven by a 12% growth from the APAC BFB segment owing to the carry-over impact of previous price increases and record-high volume sales in noodles. Gross profit was up 2% to Php18.6 billion despite a 2.1ppts margin contraction to 31.1% owing to a higher topline and significant drop in prices of raw materials in APAC BFB. EBITDA climbed
13% to Php10.0 billion on a 70bps margin expansion to 16.8% largely due to a sound APAC BFB segment and lower losses from the Meat Alternative business (MAB).<\/p>\n\n\n\n

APAC BFB: All-time high quarter<\/h3>\n\n\n\n

APAC BFB sales surged 21%\/ 12% year-on-year (y\/y) in 3Q23\/9M23, as the segment delivered an all-time high quarter in 3Q. This was supported by an all-time high volume in noodles leading to +46%\/+14% sales growth in 3Q23\/9M23 for the category, and an all-time high quarter in the Thailand unit. Favourable commodity prices in 2H23 (i.e. wheat & palm oil) improved gross profits 34%\/11% in 3Q23\/9M23 to Php5.8 billion\/Php15.9 billion. Gross profit margins saw considerable improvement with 3Q23 expanding 3.3ppts y\/y and 2.0ppts to 34.2%; although 9M23 is still slightly behind by 29bps to 32.5%.<\/p>\n\n\n\n

MAB: headwinds persist, major shareholders bets on long-term growth<\/h3>\n\n\n\n

MAB recorded 4%\/5% decline in sales for 3Q23\/9M23 to Php3.6 billion\/Php10.7 billion on lower sales volume mainly due to the price increases implemented in 2Q23. Gross profit fell 27%\/32% to Php826 million\/ Php2.6 billion as margins shrunk 7.0ppts\/9.9ppts to 22.9%\/24.6% as volume declined and high inflation persist in its primary market (UK).\\<\/p>\n\n\n\n

Despite the challenging environment, the restructuring has yielded MAB with two
consecutive quarters of having positive EBITDA (2Q23: Php10mn; 3Q23: Php12mn), thus lowering the segment\u2019s YTD losses to only Php94 million. MONDE is still keen on MAB as the major shareholders announced financial support, in cash, for any cumulative impairment that its Singaporean unit Monde Nissin Singapore Pte Ltd. (MNSPL) will incur from its investment into Monde Nissin UK Ltd. (MNUK) from
January 1, 2023 \u2013 December 31, 2032, if needed. This will allow MAB to develop their
operations while worrying less on possible future impairments.<\/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>