My Thoughts on Monde Nissin IPO – Should I Subscribe?

I thought to share my views here about Monde Nissin IPO while having my favorite merienda, Lucky Me Pancit Canton, with hot pandesal and fried egg.

Besides, many of our fellow investors were asking my opinion about it. So let’s start first with the details and brief information about the prospectus.

Monde Nissin IPO Highlights:

• Price: P13.50 per share
• Minimum Subscription: 500 shares, thereafter in multiples of 100 shares
• Subscription Start: May 19, 2021 (via PSE EASy and Accredited PSE Brokers)
• Expected Listing Date: June 1, 2021

Monde Nissin’s Business:

Monde Nissin is a global food and beverage company. They manufacture instant noodles, biscuits, baked goods, culinary aids, and alternative meat products. Their popular brands include:

• Lucky Me!
• SkyFlakes, Fita, Nissin, and M.Y. San Grahams
• Mama Sita’s
• Dutch Mill
• Quorn (UK-based meat alternatives business)

Use of Proceeds:

According to its prospectus, Monde Nissin plans to use the proceeds to fund its capital expenditure, redemption of the Arran Convertible Note, and repayment of loans to BDO Unibank, Metrobank, and BPI. Good news for you if you’re a shareholder of those banks.

To sum up, the company plans to use the proceed to expand and grow its business and pay some of its debts.

Key Financials:

Net Income:

• 2018 P 2.73 Billion
• 2019 P 6.65 Billion
• 2020 P 8.07 Billion

Current Ratio (Current Assets / Current Liabilities)

• 2018: 1.06
• 2019: 1.02
• 2020: 0.98

EBITDA Growth

• 2018: 9.2%
• 2019: 23.8%
• 2020: 9.7%

My Thoughts on Monde Nissin IPO

I like Monde Nissin’s core business. The company is already well-established, and I believe its products will continue to maintain their market position here in the Philippines and abroad.

Lucky Me! has been evolving, and it’s still a favorite of many Filipinos. Many food businesses continue to re-invent recipes using Grahams and Mama Sita’s.

Their Quorn venture in the UK also has an attractive potential as Barclays said the global meat alternatives market is expected to reach up to $140 billion by 2029 and may account for about 10% of the worldwide meat industry in ten years.

Another worthy factor is that Monde Nissin’s net income has been growing in the past three years. I don’t see any alarming details on its financial statements except for the company’s debts which, by the way, some will be paid by a part of the major proceeds from the IPO.

Will I Subscribe to Monde Nissin IPO?

Weighing in the financials and the company’s future potential, in my opinion, Monde Nissin is good to invest for long term. If you won’t be bothered about the local and global markets sentiments during these unpredictable pandemic times, it’s a good stock to hold for five years or more.

But personally, I won’t be subscribing to its initial public offering. Yes, I like Monde Nissin’s moat. However, the status of the global market right now is in a vulnerable position because of INFLATION.

You see, the effects of the pandemic in 2020, where many companies were hurt, are finally unfolding. Many companies that must make up for their lost revenue still expect lower earnings this 2021 due to higher raw materials expenses.

Prices are starting to go up—oil, construction materials, metals, housing mortgages, commodities, foods, you name it.

At times like this, investors sell off some of their stock investments. And that drives the stock market down. Investors would rely more on fixed-income investments.

While Monde Nissin’s 13.50 offer price is attractive, in my opinion, the timing here is a huge challenge because the global market is fragile right now. Nevertheless, I always find opportunities during market pitfalls. So, yes, I’m watching Monde Nissin for a better entry point.

Disclaimer: This article is based on opinions and must not be considered professional investment advice or endorsement of a particular investment. All investments have risks. Risk only the capital you’re not afraid to lose. Always do your own research before investing in the stock market.