Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd" target="_blank" data-smartkarma-citation="entities:5051:1" rel="noopener">Del Monte Pacific</a> reported a steep decline in profits led by a fall in gross margins and a steep rise in interest costs for the quarter ending 31st Jan 2023.</li>
<li>The company's gearing has risen to 5.8x led by (1) the refinancing of preference shares and expensive debt (2) acquisition of the Kitchen basics brand (3) increased working capital loan.  </li>
<li>Del Monte's precariously bloated debt levels and tighter operating conditions, given inflation-led cost pressures and moderating demand, in the current high-interest rate environment heightens the company's financial risk.</li>
</ul>



Del Monte Pacific reported a steep decline in profits led by a fall in gross margins and a steep rise in interest costs for the quarter ending 31st Jan 2023.
The company's gearing has risen to 5.8x led by (1) the refinancing of preference shares and expensive debt (2) acquisition of the Kitchen basics brand (3) increased working capital loan.  
Del Monte's precariously bloated debt levels and tighter operating conditions, given inflation-led cost pressures and moderating demand, in the current high-interest rate environment heightens the company's financial risk.


Del Monte Pacific (DELM SP): Deep in Debt, Slipping Margins, Rising Rates - Perfect Storm?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

<ul>
<li>Global branded food and beverage outfit <a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd" target="_blank" data-smartkarma-citation="entities:5051:1" rel="noopener">Del Monte Pacific (DELM SP)</a> recently announced group sales grew by 3% to US$68mn in the 3Q23 (April Y/E).</li>
<li>However net profit declined by 62% to US$9.8mn due to lower operating results and increased interest expense from higher cost bank loans.</li>
<li>Del Monte's net debt, net gearing, and net debt/EBITDA were S$2.2bn, 582.5%, and 6.1x, compared to S$1.45bn, 211%, and 4.2x a year ago. </li>
</ul>


Global branded food and beverage outfit Del Monte Pacific (DELM SP) recently announced group sales grew by 3% to US$68mn in the 3Q23 (April Y/E).
However net profit declined by 62% to US$9.8mn due to lower operating results and increased interest expense from higher cost bank loans.
Del Monte's net debt, net gearing, and net debt/EBITDA were S$2.2bn, 582.5%, and 6.1x, compared to S$1.45bn, 211%, and 4.2x a year ago. 


Del Monte Pacific: Interest Costs Weigh On Financials

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Chongqing Hongjiu Fruit / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chongqing-hongjiu-fruit" target="_blank" data-smartkarma-citation="entities:36023:1" rel="noopener">Chongqing Hongjiu Fruit (CHF HK)</a>, a multi-brand fruit company in China, is pre-marketing an HKEX IPO to raise US$200-300 million.</li>
<li>The fundamentals are uninspiring as it is delivering profitable growth with a heavy cash burn. The rising but tiny market share suggests a lack of sustainable competitive advantage.</li>
<li>Hongjiu Fruit aims to be the first HKEx-listed fruit distributor. Investors can likely avoid a bitter aftertaste by remaining on the sidelines.</li>
</ul>



Chongqing Hongjiu Fruit (CHF HK), a multi-brand fruit company in China, is pre-marketing an HKEX IPO to raise US$200-300 million.
The fundamentals are uninspiring as it is delivering profitable growth with a heavy cash burn. The rising but tiny market share suggests a lack of sustainable competitive advantage.
Hongjiu Fruit aims to be the first HKEx-listed fruit distributor. Investors can likely avoid a bitter aftertaste by remaining on the sidelines.


Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

For our next Corporate Webinar we are glad to welcome <a href="https://www.smartkarma.com/entities/del-monte-pacific-ltd" target="_blank" data-smartkarma-citation="entities:5051" rel="noopener">Del Monte Pacific (DELM SP)</a> Chief Corporate Officer Ignacio (Iggy) Sison and Investor Relations Manager Jennifer Luy.
In the upcoming webinar, Jennifer and Iggy will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Insight Provider, <a href="https://www.smartkarma.com/profiles/nicolas-van-broekhoven-24a66c2d-bca4-4f5b-adda-c4e2bcc509f4" target="_blank" data-smartkarma-citation="accounts:1208" rel="noopener">Nicolas Van Broekhoven</a>. A live Q&amp;A session will follow.
<h3>The Corporate Webinar will be hosted on Tuesday, 15 March 2022, 17:00 SGT.</h3>
<div class="content-highlight">
<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=84649603353" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
</div>
Dual-listed on the SGX and the Philippine Stock Exchange, Del Monte Pacific Limited is a global branded F&amp;B company that offers premium quality, healthy products. These include packaged fruit, vegetable and tomato, sauces, condiments, pasta, broth, stock, juices, and frozen pineapple under various brands - it also sells fresh pineapples under the S&amp;W brand.
It is proud of its heritage brands - Del Monte, S&amp;W, Contadina, and College Inn – some of which originated in the USA more than 100 years ago. The Group has exclusive rights to use the Del Monte trademarks for packaged products in the United States, South America, the Philippines, Indian subcontinent, and Myanmar, while it owns S&amp;W globally except for Australia and New Zealand. The Group owns the Contadina and College Inn trademarks in various countries.
Corporate Webinars by <a href="https://www.smartkarma.com/home/corporate-solutions/" target="_blank" rel="noopener">Smartkarma Corporate Solutions</a> feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

For our next Corporate Webinar we are glad to welcome Del Monte Pacific (DELM SP) Chief Corporate Officer Ignacio (Iggy) Sison and Investor Relations Manager Jennifer Luy.
In the upcoming webinar, Jennifer and Iggy will share a short company presentation, after which they will engage in a fireside chat with Smartkarma Insight Provider, Nicolas Van Broekhoven. A live Q&amp;A session will follow.
The Corporate Webinar will be hosted on Tuesday, 15 March 2022, 17:00 SGT.

Register for the Webinar here

Dual-listed on the SGX and the Philippine Stock Exchange, Del Monte Pacific Limited is a global branded F&amp;B company that offers premium quality, healthy products. These include packaged fruit, vegetable and tomato, sauces, condiments, pasta, broth, stock, juices, and frozen pineapple under various brands - it also sells fresh pineapples under the S&amp;W brand.
It is proud of its heritage brands - Del Monte, S&amp;W, Contadina, and College Inn – some of which originated in the USA more than 100 years ago. The Group has exclusive rights to use the Del Monte trademarks for packaged products in the United States, South America, the Philippines, Indian subcontinent, and Myanmar, while it owns S&amp;W globally except for Australia and New Zealand. The Group owns the Contadina and College Inn trademarks in various countries.
Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

Smartkarma Corporate Webinar | Del Monte: Transformation of a Heritage Food Company

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<a href="https://www.smartkarma.com/entities/olam-international-ltd" target="_blank" data-smartkarma-citation="entities:765:1" rel="noopener">Olam International (OLAM SP)</a> has been a poor stock price performer on the SGX ever since it was attacked by short-seller Muddy Waters in 2012. Olam was essentially rescued by Temasek while peer Noble went bust. The 10-year stock chart says it all. Olam recently closed at 1.76 SGD, far below its peak of 2.64 SGD last reached in February 2012!<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/233/967/original/image_58873528221633585900666.png?1633585903" class="editor-image img-responsive" data-smartkarma-image-id="233967"></figure>Fast forward almost ten years and Olam is set to go into a period of heightened corporate activity to get Temasek (53% shareholder) its required exit. As well-telegraphed OFI (Olam Food Ingredients) will list on the LSE in 1H22. The OGA (Olam Global Agri) business could get a listing in the US by late 2022 or early 2023.Both listings could unlock significant value for Temasek and Olam minorities. We expect full-on press coverage, analyst, and corporate banking awareness of the OFI deal come 1H22. Olam is a small company in a global context but at 6.7 billion SGD (18 billion SGD Enterprise Value) it is a big deal for the SGX.Back-of-the-envelope calculations and comments to Reuters and The Times make us conclude that Olam could be worth well over 3 SGD/share depending on the eventual OFI valuation and debt assigned to the unit. In a blue-sky scenario, we even get a valuation as high as 4 SGD. That is 70% to 124% upside from Olam's last traded price on SGX. In this scenario, we assign 0 value to OGA which is unrealistic. Major wild card: what % of Olam's 15 billion SGD debt gets assigned to OFI.Given Temasek's ($400 billion AUM and Singapore's key SWF) importance to global investment banks, we are betting that the players involved will pull out all stops to make OFI's listing a success. Minority investors looking to ride the coattails of "the great Temasek unlock" would be wise to position themselves in Olam stock during 4Q21. The downside is protected by a 4% dividend yield which should be safe in case capital markets make an IPO impossible in 1H22.

Olam International (OLAM SP) has been a poor stock price performer on the SGX ever since it was attacked by short-seller Muddy Waters in 2012. Olam was essentially rescued by Temasek while peer Noble went bust. The 10-year stock chart says it all. Olam recently closed at 1.76 SGD, far below its peak of 2.64 SGD last reached in February 2012!Fast forward almost ten years and Olam is set to go into a period of heightened corporate activity to get Temasek (53% shareholder) its required exit. As well-telegraphed OFI (Olam Food Ingredients) will list on the LSE in 1H22. The OGA (Olam Global Agri) business could get a listing in the US by late 2022 or early 2023.Both listings could unlock significant value for Temasek and Olam minorities. We expect full-on press coverage, analyst, and corporate banking awareness of the OFI deal come 1H22. Olam is a small company in a global context but at 6.7 billion SGD (18 billion SGD Enterprise Value) it is a big deal for the SGX.Back-of-the-envelope calculations and comments to Reuters and The Times make us conclude that Olam could be worth well over 3 SGD/share depending on the eventual OFI valuation and debt assigned to the unit. In a blue-sky scenario, we even get a valuation as high as 4 SGD. That is 70% to 124% upside from Olam's last traded price on SGX. In this scenario, we assign 0 value to OGA which is unrealistic. Major wild card: what % of Olam's 15 billion SGD debt gets assigned to OFI.Given Temasek's ($400 billion AUM and Singapore's key SWF) importance to global investment banks, we are betting that the players involved will pull out all stops to make OFI's listing a success. Minority investors looking to ride the coattails of "the great Temasek unlock" would be wise to position themselves in Olam stock during 4Q21. The downside is protected by a 4% dividend yield which should be safe in case capital markets make an IPO impossible in 1H22.

Olam: Lots of Corporate Activity in '22/'23 to Unlock Significant Value for Temasek and Minorities

Singapore

Del Monte Pacific is a global branded food and beverage company that manufactures, processes, markets, and distributes a diverse range of products including packaged fruits, vegetables, tomato-based items, sauces, condiments, juices, and fresh and frozen pineapples. The company operates under brands such as Del Monte, S&W, Contadina, and College Inn. It was incorporated in 1999 and is headquartered in Road Town, British Virgin Islands.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Del Monte Pacific (DELM SP)