{"id":327960,"date":"2024-05-17T11:30:51","date_gmt":"2024-05-17T03:30:51","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327960"},"modified":"2024-05-17T11:30:53","modified_gmt":"2024-05-17T03:30:53","slug":"stock-in-focus-monde-nissin-corp-monde-17-may-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-monde-nissin-corp-monde-17-may-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Monde Nissin Corp. (MONDE) – 17 May 2024 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>17 May 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 12.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We upgrade our Target Price for MONDE by 14% from Php10.50\/share to Php12.00\/share on strong core earnings results in 2023, although we maintain a HOLD rating as we believe that the stock is trading at fair value estimates. Furthermore, fundamentals in the Asia-Pacific Branded Food & Beverage (APAC BFB) unit remain robust, sustaining the overall business whilst allowing the Meat Alternative Business (MAB) segment to restructure and convalesce.<\/p>\n\n\n\n

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

Macroeconomic impact<\/h3>\n\n\n\n

We are attentive to macroeconomic factors such as inflation and interest rates in the domestic and international space that may catalyse further deterioration in profitability, especially in MAB. However, we believe that any further impairment in MAB is already priced-in and would be mostly covered by the Guaranty Asset Gain. On another note, we are hopeful that the APAC BFB unit will progress its upward momentum, and that the MAB will turn around by the end of the year.<\/p>\n\n\n\n

Earnings in line with expectations<\/h3>\n\n\n\n

MONDE recorded 2023 core net income of Php7.6 billion, 16% higher year-on-year (y\/y), in line with expectations. Earnings were driven by the record-high performance of the APAC BFB segment at Php8.6 billion, slightly offset by a Php1.0 billion loss in MAB. The reported net loss for the year was at Php625 million, mainly attributed to a non-cash operating impairment of assets in MAB of Php10.1 billion, partially offset by Php1.3 billion of Guaranty Asset Gain. <\/p>\n\n\n\n

Gross profit was up 7% to Php24.7bn on flat margins at 30.8%, boosted by margin improvement in the 4Q23 by 4.1ppts to 31.3%. Margins of APAC BFB expanded 1.9ppts to 32.9%, while MAB slashed 8.9ppts to 21.2%. EBITDA climbed 21% to Php13.5bn on a 1.8ppts margin expansion to 16.9%, supported by a 2.5ppts margin growth in APAC BFB to 20.5%, whereas MAB EBITDA closed the year in the negative.<\/p>\n\n\n\n

Guaranty asset provides relief in light of additional MAB impairment<\/h3>\n\n\n\n

Due to lower projected cash flow and higher interest rates, MAB had to take another round of impairment. This is done at the Singapore level (MNSPL) as Monde Nissin UK are both under MNSPL. Total impairment in the balance sheet was down to Php244.6bn (GB\u00a33.5) after an impairment of Php11.6 billion was mostly
offset by a Php10.4 billion (GB\u00a3147.8) Guaranty Asset, leaving retained earnings largely untouched at Php7.0 billion from Php7.2 billion prior to the impairment. Following the 2023 impairment exercise, MAB\u2019s value-in-use (VIU) fell to GB\u00a3242.0 from 2022\u2019s GB\u00a3380.0.<\/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>