Monde Nissin rises on Q3 data, support for alternative meat

MONDE NISSIN Corp.’s share price went up last week amid a strong third-quarter (Q3) revenue report and its commitment to absorb the losses of its subsidiary.

Data from the Philippine Stock Exchange (PSE) showed a total of 28.49 million shares worth P228.76 million were traded from Nov. 6 to 10, making the stock the 16th most actively traded in the local market last week.

Shares in the Betty T. Ang-led food manufacturer rose by 6.1% week on week to P8.38 per share on Friday from its P7.90 finish on Nov. 3.

Year to date, the stock’s price declined by 24.4%.

Analysts said Monde Nissin’s shares last week were driven mostly by the company’s third-quarter income report and its commitment to shoulder future impairment losses of its alternative meat company, Quorn Foods.

“This provided investors with something to cheer about. As in the previous quarters, Monde’s earnings had declined due to its challenged meat alternative business and lower volumes for some of its product categories,” Philstocks Financial, Inc. Research and Engagement Office Mikhail Philippe Q. Plopenio said in an e-mail.

In the third quarter, Monde Nissin recorded a 68.2% increase in its attributable income to P2.3 billion from P1.4 billion last year. Its consolidated revenues rose by 15.7% to P20.5 billion from P17.7 billion in the same period a year ago.

Meanwhile, earnings from its alternative meat business declined by 4.2% to P3.6 billion as of September due to the challenging retail market in the United Kingdom.

In a company disclosure, the controlling family shareholders said that they decided to extend “meaningful financial support” to cover future impairment losses capped at up to 12% of Monde Nissin’s outstanding shares amounting to 2.156 billion shares.

“This financial support by myself and the family shareholders comes after listening to and reflecting on the concerns that some of our shareholders have expressed about the current challenges in the meat alternative category which are impacting our business in the United Kingdom,” Chief Executive Officer Henry Soesanto said.Despite the headwinds, analysts expect upbeat market sentiment but anticipated Quorn to drag the company’s bottom line performance in the fourth quarter.

“We expect margin improvements in [the fourth quarter] for the company as they are able to acquire key commodities at favorable prices. The company’s Asia-Pacific business is expected to sustain volume recovery under the noodle division, which saw volumes decline in the same period last year due to the controversy surrounding its Lucky Me! Brand,” Manuel Antonio M. Castro, equity analyst at Regina Capital Development Corp. said in an e-mail.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce expects the company’s net income attributable to the parent firm to dwindle by about 3.2% in the fourth quarter to P2.2 billion.

“Monde Nissin’s cost of goods sold increased by 17.7% in the third quarter of 2023, due to higher prices for raw materials and packaging. This trend is likely to continue in the fourth quarter, as inflationary pressures remain high. For the full year, Monde Nissin’s net income attributable to parent is estimated to reach P7.2 billion,” Mr. Arce said in an e-mail.

Headline inflation slowed to 4.9% in October from 6.1% in September and 7.7% in the same period last year, well below the 5.1-5.9% forecast of the Bangko Sentral ng Pilipinas for the month.

Mr. Arce placed Monde Nissin’s support and resistance prices this week at P7.81 and P8.75, respectively.

Regina Capital Development Corp.’s Mr. Castro pegged the stock company’s support and resistance levels at P7.9 and P8.6, respectively.

“For Monde Nissin’s, our initial support and resistance are pegged at the P8.21 and P9.62 levels, respectively,” said Philstocks Financial, Inc.’s Mr. Plopenio. — Mariedel Irish U. Catilogo