Comprehensive Analysis of Monde Nissin Corp and Peer Companies

Date: November 7, 2024

Broker Name: Maybank Securities Inc.

Introduction

Monde Nissin Corp. (MONDE PM) has demonstrated robust performance in the 3Q/9M24 period, driven by its market-leading presence in the Asia-Pacific Branded Food & Beverage (APAC-BFB) segment. This report delves into Monde Nissin’s performance, valuation, and future prospects, along with an analysis of its peer companies in the consumer staples sector.

Monde Nissin Corp. (MONDE PM)

Smooth Sailing with Strong 3Q/9M24 Results

Monde Nissin posted a core net income of PHP2.4 billion for 3Q24 and PHP7.5 billion for 9M24, marking an 8% and 31% year-over-year increase, respectively. These figures are in line with the FY24 estimates, at 75% of the projected earnings. The performance was primarily driven by the APAC business, which saw a significant gross margin expansion due to lower commodity costs.

APAC-BFB: The Star Performer

The APAC-BFB segment reported a 4.3% year-over-year topline growth in 9M24, largely volume-driven with a 3.3% increase. Monde Nissin holds strong market shares in noodles (67.3%) and biscuits (28.5%), contributing to 47% and 32% of the APAC sales mix, respectively. The segment’s gross profit margin (GPM) expanded by 5.1 percentage points to 37.6%, driven by lower commodity costs and a favorable sales mix. Consequently, the segment’s EBITDA margin increased to 24.2%.

Quorn’s Restructuring Efforts

In 3Q24, Quorn recorded a non-cash impairment of approximately GBP7 million for fixed assets with lower utilization. The company also announced organizational changes, including the appointment of a new CEO for the Meat Alternative business and further supply chain transformations. Quorn aims to be EBITDA neutral in FY24 and EBITDA positive in FY25.

Valuation and Target Price

Monde Nissin is currently trading at 18.2x FY25E PER, which is 1 standard deviation below its 5-year mean PER of 29.3x. The target price (TP) of PHP12 implies a 19.9x FY25E PER. The company’s mid-single-digit topline guidance for APAC-BFB and continued GPM improvement are crucial for achieving the projected 30% net income growth for FY24.

Company Description and Statistics

Monde Nissin produces instant noodles, biscuits, and alternative meat products, operating in the Philippines, Thailand, UK, US, and Europe. The company’s market capitalization stands at PHP189.7 billion (USD3.2 billion), with a 52-week high/low of PHP11.76/7.75. The major shareholders include Hartono Kweefanus (23.5%), Betty Ang (18.2%), and Henry Soesanto (8.6%).

Financial Metrics and Performance

Monde Nissin’s revenue for FY24E is projected at PHP81,081.9 million, with an EBITDA of PHP8,708.5 million. The core net profit is estimated to be PHP9,912.6 million, translating to a core EPS of PHP0.55. The company aims for a gross profit margin of 34.5% in FY24, supported by lower input prices and positive cash flow from operations, ensuring a healthy net gearing ratio.

ESG Initiatives

Monde Nissin focuses on sustainability through five key pillars: governance, community growth, nutritious products, efficient resource use, and inclusive workplace practices. The company targets zero waste to nature by 2030 and aims for 100% recyclable packaging by 2025. Additionally, Monde Nissin invests in renewable energy, with solar panels installed at its Santa Rosa facility.

Peer Companies Analysis

Century Pacific Food (CNPF PM)

Century Pacific Food is a prominent player in the food industry, with a market capitalization of USD2.5 billion. The company is expected to deliver a revenue growth of 21.9% in FY24E and 19.2% in FY25E. The projected P/BV ratios are 3.9x for FY24E and 3.4x for FY25E, reflecting strong profitability with ROE figures of 17.8% and 17.7%, respectively.

D&L Industries Inc. (DNL PM)

D&L Industries, with a market capitalization of USD0.8 billion, is projected to grow its revenue by 18.5% in FY24E and 13.4% in FY25E. The P/BV ratios for the respective years are 2.1x and 1.9x, with ROE figures of 11.1% and 14.2%, indicating robust financial health and growth potential.

Jollibee Foods Corp (JFC PM)

Jollibee Foods, a major player in the food and beverage sector, has a market capitalization of USD5.2 billion. The company is expected to achieve a revenue growth of 27.9% in FY24E and 24.1% in FY25E. The P/BV ratios are projected at 4.1x and 3.7x, with ROE figures of 18.7% and 19.1%, demonstrating strong financial performance and growth prospects.

Philippine Seven Corp. (SEVN PM)

Philippine Seven, with a market capitalization of USD1.9 billion, is anticipated to grow its revenue by 27.6% in FY24E and 23.4% in FY25E. The P/BV ratios for the respective years are 7.0x and 5.6x, with ROE figures of 25.2% and 23.8%, indicating robust financial health and strong growth potential.

Puregold Price Club (PGOLD PM)

Puregold Price Club, with a market capitalization of USD1.6 billion, is projected to achieve a revenue growth of 8.9% in FY24E and 8.4% in FY25E. The P/BV ratios are 0.9x for both years, reflecting solid financial stability with ROE figures of 10.7% and 10.4%, respectively.

Robinsons Retail Holdings (RRHI PM)

Robinsons Retail Holdings has a market capitalization of USD0.9 billion. The company is expected to grow its revenue by 10.1% in FY24E and 9.1% in FY25E. The P/BV ratios for the respective years are 0.7x, with ROE figures of 7.1% and 7.7%, indicating stable financial performance and growth potential.

Universal Robina Corp (URC PM)

Universal Robina, with a market capitalization of USD3.8 billion, is anticipated to achieve a revenue growth of 15.8% in FY24E and 13.2% in FY25E. The P/BV ratios are projected at 1.8x and 1.6x, with ROE figures of 11.2% and 12.4%, reflecting strong financial health and growth prospects.

Wilcon Depot Inc. (WLCON PM)

Wilcon Depot, with a market capitalization of USD1.1 billion, is expected to grow its revenue by 23.1% in FY24E and 21.9% in FY25E. The P/BV ratios for the respective years are 2.7x and 2.5x, with ROE figures of 11.9% and 11.6%, indicating robust financial health and growth potential.

Conclusion

Monde Nissin Corp. stands out with its strong performance in the APAC-BFB segment and strategic restructuring efforts in Quorn. The company’s financial metrics and ESG initiatives position it for sustained growth. Alongside Monde Nissin, its peer companies in the consumer staples sector also demonstrate promising growth prospects and robust financial health, making them attractive investment opportunities.