Del Monte

Del Monte: Maybank-KE initiates coverage with a Buy Call and TP of $1.00 pegged at 25x FY14 P/E. House note that Del Monte is a dominant F&B player in the Philippines, and the management team since 2006 has been reshaping the company and the fruits of their labour would be more evident in the next three years. See the co experiencing a structural shift towards higher margins and ROE (from 13% currently to 20% by FY15F), as its business model changes from being an OEM exporter outside Philippines to a brand owner. This is boosted further by Del Monte’s vertically integrated business. Earnings growth will be accelerated by the expiry of unfavorable supply contracts by FY14.TP is justified by a 22% net profit CAGR and dividend payout of 75%, which is superior to ASEAN listed peers. Initiate with BUY.