Century Pacific Food’s shares decline due to inflation woes

CENTURY PACIFIC Food, Inc.’s stocks continued to decline last week as investor confidence soured amid elevated inflation, analysts said.

Data from the Philippine Stock Exchange (PSE) showed a total of 17.75 million shares worth P435.68 million were traded from April 11 to 14.

Century Pacific Food shares closed at P24.15 apiece on Friday, down by 1.4% from the P24.50 closing price last April 5. For the year, the stock has fallen by 17.4%.

The company released its full-year earnings in 2022 on April 4, with its net income going up by 6% to P5 billion from P4.22 billion in 2021.

Century Pacific Food also reported that its consolidated revenues reached P62.2 billion.

Analysts attributed the company’s positive revenues to the performance of its Branded business sector, which grew by 16% on the back to consumers choosing alternative products due to elevated inflation.

Globalinks Securities and Stocks, Inc. Head of Electronic Trading Mark Crismon V. Santarina noted in a Viber message that the company’s Original Equipment Manufacturer (OEM) also grew by 4%.

He said that while the market’s volume “remained thin,” he said that there was significant foreign buying activity for Century Pacific Food last week.

RCBC Securities, Inc. Equity Research Analyst Brenda A. Gannaban said in an e-mail note that she believes Century Pacific Food can weather both good and challenging market conditions because they “offer value and premium products overall/essential food items.”

“Although revenues grew 14% [year on year], it translated to a modest net income growth of 6% due to margin erosion on higher raw materials cost, and increased innovation and A&P (advertising and promotional) spend,” she added.

Despite the increase in its earnings last year, the price of Century Pacific Food’s stock has gone down, and analysts said the stock was affected by challenging economic conditions and high inflation.

“The decline in CNPF’s stock price from its last year’s closing price of P29.25 could be attributed to several factors. One of the main reasons could be the overall market conditions, including a bearish sentiment or economic uncertainty, leading investors to sell off their CNPF holdings,” Globalinks Securities and Stocks’ Mr. Santarina said, referring to Century Pacific Food’s ticker symbol CNPF.

RCBC Securities’ Ms. Gannaban said most stocks traded downwards due to a bearish market, and Century Pacific Food still has trading investors because of its “high growth prospects from internally-generated innovations and other acquisitions, and high brand equity.”

Philippine headline inflation eased to 7.6% from 8.6% in February, still above the Bangko Sentral ng Pilipinas’ (BSP) target of 2-4% and 6% forecast for the year. In 2022, headline inflation averaged at 5.8%, beyond the BSP’s 2-4% goal.

Ms. Gannaban expects Century Pacific Food’s net income to post a high single-digit growth.

She said with the company’s high input costs last year seen to keep its income “depressed” in the first quarter, she expects recovery from the second quarter onwards.

Meanwhile, Mr. Santarina expects Century Pacific Food to have posted a net income of P1.2 billion in the first quarter, with his full-year forecast at P5.61 billion.

“To achieve its targets, CNPF should focus on its core business and work towards establishing its market dominance,” he said.

Inflation will continue to put pressure on Century Pacific Food’s earnings this year as higher borrowing costs and weaker consumer demand will affect the food, beverage, and tobacco industry, both analysts said.

“I believe investors would expect better cost controls or margin recuperation moving forward. There probably are some expectations for the recovery of the OEM Export segment, the impact of recent acquisitions like the integration of Ligo in its operations, and the growth trajectory of the promising emerging and new products like milk and pet food,” Ms. Gannaban said.

She placed the stock’s support and resistance levels at P24.20 and P24.80, respectively.

For his part, Mr. Santarina put Century Pacific Food’s support and resistance levels at P22.85 and 25.85, respectively.

“CNPF’s recent acquisition of Ligo and expansion of its coconut OEM facility last year are positive developments for the company, indicating a commitment to growth and strengthening its core businesses. As a result, the company may be well-positioned to maintain its momentum this year,” he added. — B.T.M. Gadon