BYND Stock – Meatless Manila IPO offers something to chew on
Companies need a story to pique investor interest. Would-be owners of Manila-based Monde Nissin, which hopes to raise $1 billion in an initial public offering, may be tempted to focus on the company’s ownership of Quorn as a way to play the fast-growing, ultra-cool meat-free market. But products like Lucky Me instant noodles and Jelly Vit juice are the key to valuing the business.
Founded in 1979, family-controlled Monde Nissin sells across the region with its real strength in the Philippines. Revenue growth of 5% a year in the snacks business is rather bland, however.
Forecasts for the meat-free market are far juicier: Consultant BCG predicts seven-fold global growth to $290 billion by 2035, while unprofitable Beyond Meat (BYND.O) is doubling sales every year. Quorn, which the company bought in 2015 for $851 million, makes up a fifth of Monde Nissin’s revenue. But sales have been rising a skinny 9% a year, and pre-tax profit just 6%, filings at the UK’s Companies House show. Executives blame capacity constraints and have recently installed new managers.
As a result, Monde’s meatless offerings don’t deserve to trade at anything like the 16 times sales Beyond Meat enjoys. Using the 4 times multiple from last month’s $400 million sale of Vivera to Brazil’s JBS (JBSS3.SA) leaves Quorn valued at a more digestible $1.3 billion.
Monde’s snacks business is worth three times as much, based on a blend of the earnings multiples of rivals Universal Robina (URC.PS), Indofood CBP (ICBP.JK) and Chinese peers.
Add them up and Monde can command an overall value of $5.2 billon, a shade above the $4.9 billion implied by the reported 13.5 pesos a share price. Rising wheat and palm oil costs are a short-term worry. And some discount is deserved for the lack of detail on the company’s intensely private Indonesian-Filipino founding family, including Chief Executive Henry Soesanto, who will still control 71%.
As a result, Monde looks fairly priced – a good start for what will be the largest-ever domestic IPO on the Philippine Stock Exchange. There’ll be more helpings if Soesanto can beef up Quorn’s performance and make a success of new snacks products like its “fluffylicious” bread. Better, though, to leave something on the table now to keep investors salivating later.
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– Snack-food maker Monde Nissin is soon to price the Philippine Stock Exchange’s biggest-ever initial public offering for a domestic business. The company, which is seeking $1 billion to fund growth and pay down debt, is best known in Southeast Asia for its noodle and biscuit brands. In 2015 it bought Quorn, the UK’s leading meat-alternative brand.
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