PhillipCapital analyst Vivian Ye has maintained her “buy” recommendation on Del Monte with a higher target price of 63 cents from 62 cents previously.
Ye’s recommendation on March 15 comes as the dual-listed food and beverage (F&B) group saw earnings of US$25.9 million ($35.3 million) for the 3QFY2022 ended January, which exceeded her expectations at 29% of her full-year forecasts.
The quarter’s gross profit, however, came in lower than expected due to inflationary pressures, writes Ye.
On this, Ye has upped her PATMI estimates for the FY2022 by 7.5% as she lowers her forecasts for operating and interest expenses in line with the trend seen in Del Monte’s 9MFY2022 results.
Her revised target price is now pegged to 12x FY2022 P/E, down from 13x.
Looking ahead, Ye expects margins for Del Monte Foods (DMFI), the US subsidiary of Del Monte to recover in the 4QFY2022.
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“DEMFI has continued to increase its market share in the US in various categories, through expanding distribution channels, and building the Del Monte brand”, writes Ye in her report.
“This ensures its pricing power, which protects the bottomline, especially in the current inflationary environment... DMFI would also continue its emphasis on innovation, with items launched in the past three years on track to reach 8.5% of DMFI’s total sales in FY2023,” she adds.
In addition, Ye is also positive on Del Monte Philippines (DMPI) as remains market leaders in key categories such as canned vegetable, canned fruit, canned tomato and fruit cup snack.
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“DMPI is continuing to strengthen its competitive position of the brands and drive core category growth in key channels and segments,” she continues.
Shares in Del Monte closed 1 cent lower or 2.82% down at 34.5 cents on March 15.
Photo: Del Monte
