Quick Take: Monde Nissin is capex-heavy! and 2 more market updates
Monde Nissin [MONDE 11.20 1.2%] [link] board votes to re-allocate P2.2 billion of its IPO proceeds away from its alternative meat (Quorn) segment to support its Asia Pacific Branded Food and Beverage Business segment. This is the third re-allocation of the P46.3 billion in net proceeds that the company realized as part of its 2021 IPO. The first, done in August 2021, re-allocated P15.6 billion away from the original capex budget of P28.5 billion to repay loans. The second, in November of 2021, re-allocated P7.1 billion away from capex to expand the operational capacity of Quorn. This third re-allocation will take P2.1 billion from that capex budget, leaving somewhere around P3.7 billion for capex spending. That’s an 87% drop in the capex allocation.
MB Quick Take: MONDE is trading just above its all-time low price, and the overall trajectory of the stock has been negative since Q4 of 2021, just before the second re-allocation was announced. Despite how heavy and bloated the initial IPO seemed, I liked that it was capex-heavy, since that is spending that is intended to grow income streams for shareholders in the future. IPO buyers jumped on at the thought of growing that Quorn segment. But that initial P28.5 capex budget has now been slashed down all the way to P3.7 billion. How eager would those IPO buyers have been in 2021 if they could look into the future and see that this budget would be so severely adjusted without their input? It’s like when I gave my son P500 to buy school supplies at National Bookstore, and he instead bought a Tomica car from Toys 'R' Us for P240, some candy for P160, and a single pen. “It’s just a re-allocation, dad. The board voted on it.”
US Federal Reserve (the Fed) [link] raised US interest rates by 25 basis points. US markets fell on the news. The Fed’s chairman, Jerome Powell, said that the fight against inflation has “a long way to go” and that getting inflation back down to 2% will be “bumpy”. The Fed forecasted that it would probably need to raise rates another 25 basis points in 2023, but that it is “close” to ending the tightening cycle.
MB Quick Take: There was real fear among some that a “pause” would signal a much larger banking industry problem was brewing behind the scenes, and that the Fed would sacrifice the fight on inflation to prevent the US banking sector from unraveling at the seams. While the Fed is continuing to harp on this “the fight will be longer than you think”, this does feel like a new turn for the Fed to be talking so openly about ending the tightening cycle “soon”. As for the Twitter poo storm about how a pause would have roasted the faces off of the people with soaring inflation, or how a 25 bp raise could have triggered a full-blown banking crisis... the truth is that those are both issues that we will continue to have to deal with. This rate raise doesn’t solve either of them. Inflation is still insanely high.
Filinvest REIT [FILRT 5.36 2.2%] [link] claims that FILRT “reached” P1.3 billion in net income for FY22, “achieved” on revenues of P3.24 billion. The FY22 net income figure is actually a 30% drop from FILRT’s reported FY21 net income of P1.85 billion, and a 5% drop in total revenues. Reverse engineering the Q4 performance, FILRT earned P250 million in net income in Q4/22, which is up 59% y/y but down 27% q/q.
MB Quick Take: This is a shameless press release. Not only did FILRT purposefully avoid relating the FY22 net income and revenue figures to previous periods (because it’s down hard), but it had the audacity to claim that it “reached” that level of profitability as though it were some kind of achievement to make a half billion less than the year before. Then, to top it all off, it devoted 25% of the press release to droning on about the “growing list of accolades” that FILRT has received for its “sustainability-themed” REIT. I’ll give them one thing; the board correctly identified that its FY21 dividend rate of around P0.11/share per quarter was not sustainable, and chopped the dividend down to just P0.08/share per quarter in FY22. Kudos?
--
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
- Latest
