Thursday, March 20, 2014
Del Monte: PhillipCapital initiated on Del Monte with a BUY rating and $0.82 TP. House are positive on Del Monte for its key growth drivers and excellent growth potential. Factoring in post-acquisition effects of the consumer food business of Del Monte Corporation, PhillipCapital estimates the shares to be currently trading at about FY13 PE 18.3x and FY14F (end Dec) PE of 15.9x, which are lower than its peers' average. With the strong international brand equity allowing for premium pricing, Del Monte's leading market shares in the US and Philippines provide a strong platform for further consolidation and growth. Key earnings growth drivers include: 1) Shift from juice concentrates to more profitable branded RTD beverages. 2) Continued growth from domestic market in the Philippines. 3) Expansion of the S&W branded business in North Asia and Middle East. 4) Expansion of its recently acquired business in the US.