When it comes to investing in equities listed at the stock exchange, one of the best advises a stock trader/analyst can give is to build a portfolio that includes food-based companies. And this is for one good reason: Filipinos still prioritize food purchases, despite inflation pressures.

And looking at the roster of food companies listed at the Philippine Stock Exchange (PSE), one of those that have yielded good returns for investors over the past 12 months is Century Pacific Foods Inc. (CNPF), which also exports food products. CNPF exports its products as an original equipment manufacturer (OEM), meaning its clients use their own brands.

Over the past 12 months, the price of CNPF shares increased by 42%, or from P29.75 in October 17, 2023 to P42.30 on October 18, 2024 (Thursday). This clearly shows that the shares of CNPF are resilient versus inflation issues.

The latest closing price of CNPF also exceeded the projected P40 per share by Maybank Investment Bank Group (IBG) in a report released on August 12, 2024.

SUSTAINING PROFITABILITY

Like major listed food firms, CNPF has sustained its profitability with much of its revenues still generated from the domestic market.

For the first six months of the current year, CNPF posted a 14% increased its its attributable net income to P3.63 billion from P3.2  billion in the same period of 2023, led by “favorable trends in commodity costs.”

In terms of consolidated revenues, CNPF reported a 13% increased to P37.74 billion in the January-June period from the P33.41 billion of the same period last year.

The bulk of the company’s revenues came from its branded business, composed of marine, meat, and milk and other segments, predominantly for the domestic market. On the other hand, OEM exports accounted for a fifth of CNPF’s business.

Maybank IBG sees the company improving its net income due to its branded business that can withstand inflation pressures.

“We expect further upside to CNPF’s margins and as we expect CNPF’s essentials-focused branded business to remain resilient against inflation,” it added.

However, Maybank IBG said that when it comes to growth, CNPF’s OEM export business recorded a bigger growth of 42% year-on-year (YoY), while its branded business yielded a 7% expansion YoY.

“The strong rebound in OEM/exports (+42% YoY; 17% of revenue) owing to softening commodity costs and favourable forex complemented the 7% YoY growth in the branded business (83% of revenue), such that 1H24 (first-half 2024) revenue rose 13% YoY to P37.7 billion,” it added.

On revenue and income projections, Maybank IBG sees CNPF’s revenues reaching P74.619 billion this year, exceeding by 11.17% the 2023 actual revenues of P67.123 billion.

For net income, the projection this year is P7.164 billion, which is higher than the P6.339 billion of 2023, according to Maybank IBG.

Concluding, the shares of CNPF listed at the PSE and the company itself have proven to be resilient versus inflationary issues. And with the inflation environment improving and the Bangko Sentral ng Pilipinas (BSP) reducing key interest rates twice in a row, investing in CNPF shares can be a good proposition.

(PHOTO FROM CENTURY PAFICIC FOODS WEBSITE)