Wednesday, January 15, 2014

DEL MONTE PACIFIC- Changes Abound (UOBKH)

DEL MONTE PACIFIC
Share Price S$0.645
Changes Abound

INVESTMENT HIGHLIGHTS
• Potential margin uplift from in-house PET bottling for Del Monte Philippines. Currently, the bottling of branded beverages sold in the Philippines is being outsourced at a loss. The contract will terminate in Aug 14 and the group intends to bring the process in-house. Management estimates the segment’s gross margin will improve to 20-25% from the current 9% due to this move.


• S&W brand (S&W) to breakeven in 2013; high double-digit growth from existing and new markets in the near term. Management will continue to focus on growing S&W’s processed and fresh businesses in Asia and the Middle East. For one, it plans to introduce tetra-packed juices in the latter market, where consumers are largely non-alcohol drinkers. S&W’s processed sales rose 47% yoy in 3Q13 driven by China, Korea, Middle East and Indonesia. Fresh sales rose 31% yoy driven by Korea, Japan and China. Management expects S&W to breakeven in 2013 and for an overall annual growth of 20% to be achievable in the near term as the business continues to gain traction.

• Higher profitability in 2015 from better supply contracts. A number of Del Monte’s long-term supply contracts will undergo repricing in 2014-15. The group is intent on negotiating better terms to reverse its loss-making positions. The agreement to supply processed pineapple products to Del Monte USA will terminate in Nov 14, which will allow the group to sell directly into that market at market prices, resulting in better margins. The contract to supply fresh pineapples in Asia will also shift to market pricing beginning Jan 15.

• Indian JV targets to break even in 2016 on better sales and improved scale. As of 9M13, FieldFresh Foods’ equity loss declined to US$3.6m from US5.6m in 2012 and US$9.7m in 2011. Del Monte processed sales under the JV grew 34% yoy in 3Q13. Management expects the improvement to be sustained on the back of better sales mix, improved prices, reduced overhead and tigher control of expenses.

• Stretching fundraising capacity for US acquisition with plans for the US$1.675b deal to include LBO debt, common equity, preferred share issuances, and a rights offering. We see execution risks and a long, transitional period for the group’s acquisition of US-based Del Monte Foods’ consumer food business.

VALUATION
• Del Monte Pacific (Del Monte) is trading at an FY14F and FY15F PE of 16x and 10x respectively. Based on Bloomberg consensus, the 12-month target price for the stock is S$0.98, which translates to a 52% potential upside from the current level.



Source/Extract/Excerpts/来源/转贴/摘录: UOBKH-Research,
Publish date:13/01/14

No comments:

Post a Comment

Warren E. Buffett(沃伦•巴菲特)
Be fearful when others are greedy, and be greedy when others are fearful
别人贪婪时我恐惧, 别人恐惧时我贪婪
投资只需学好两门课: 一,是如何给企业估值,二,是如何看待股市波动
吉姆·罗杰斯(Jim Rogers)
“错过时机”胜于“搞错对象”:不会全军覆没!”
做自己熟悉的事,等到发现大好机会才投钱下去

乔治·索罗斯(George Soros)

“犯错误并没有什么好羞耻的,只有知错不改才是耻辱。”

如果操作过量,即使对市场判断正确,仍会一败涂地。

李驰(中国巴菲特)
高估期间, 卖对, 不卖也对, 买是错的。
低估期间, 买对, 不买也是对, 卖是错的。

Tan Teng Boo


There’s no such thing as defensive stocks.Every stock can be defensive depending on what price you pay for it and what value you get,
冷眼(冯时能)投资概念
“买股票就是买公司的股份,买股份就是与陌生人合股做生意”。
合股做生意,则公司股份的业绩高于一切,而股票的价值决定于盈利。
价值是本,价格是末,故公司比股市重要百倍。
曹仁超-香港股神/港股明灯
1.有智慧,不如趁势
2.止损不止盈
成功者所以成功,是因为不怕失败!失败者所以失败,是失败后不再尝试!
曾淵滄-散户明灯
每逢灾难就是机会,而是在灾难发生时贱价买股票,然后放在一边,耐性地等灾难结束
  • Selected Indexes 52 week range

  • Margin of Safety

    Investment Clock

    World's First Interactive Investment Clock