Report
EUR 4.36 For Business Accounts Only

Intermarket Pulse: Food Producers: Company specific negatives drag CY17 performance

  • IMS Food Universe (EFOODS, NATF, UPFL and FFL) posted combined CY17 NPAT of PRs239mn, down a massive 94%YoY. Dairy companies reported a net loss in CY17 while non-dairy players depicted an 8%YoY rise in profits.
  • Although both dairy players EFOODS and FFL reported net loss in 4QY17, FFL gained significant market share in both UHT and Tea whitener category while EFOODS dairy volumes dropped significantly, reflecting in 25%YoY revenue decline. On the other hand, non-dairy companies NATF & UPFL depicted 37%/13%YoY topline growth.
  • For the companies we track, TTM (weighted average) P/S is 3.6x and P/E (ex EFOODS & FFL) is 38.4x. We have a Sell stance on EFOODS with a TP of PRs72/sh. Given that the sector is trading at a significant premium vs. the broader market, we would wait before advocating fresh entry in this space especially in the dairy segment. 
Underlyings
Engro Foods

FrieslandCampina Engro Pakistan Ltd Formerly known as Engro Foods Ltd. FrieslandCampina Engro Pakistan Limited, formerly Engro Foods Limited, is a Pakistan based company engaged in the manufacturing, processing and marketing of dairy products, fruit drinks and frozen desserts. The Company also owns and operates a dairy farm. The Company's segments include Dairy and beverages; Ice cream and frozen dessert, dairy farm and Others. The Company's brands include Olper's, Olper's Lite, Omore, Dairy Omung, Olper's Lassi and Tarang. The Company offers frozen desserts in cups, sticks, cones and family packs. The Company's exports portfolio consists of branded products, anhydrous milk fat (AMF) and unsalted butter. Its branded products include milk, beverages, tea whitener and others. The Company offers olper's full cream milk, olper's lite, olper's cream, olper's tarrka and olper's dobala. Olper's Lite is a low-fat, hi-calcium milk. The Company has operations in countries, such as Mozambique, Sri Lanka, Singapore, Guinea, Libya and the United Arab Emirates.

Fauji Foods

Fauji Foods Limited is a Pakistan-based company, which operates a spray dryer for processing of milk powder. The Company is engaged in processing and marketing of dairy products, juices and jams. The Company's products include Processed Dairy and Fruit Products. Its Dairy Products include Nurpur Lite, Flavored Milk, Nurpur Butter, Whole Pasteurized Milk and Ultra High Temperature (UHT) Milk. Its Processed Dairy includes Skimmed Milk Powder, Full Cream Milk Powder, UHT Cream and Nurpur Cheese.

National Foods Ltd. (Pakistan)

National Foods Limited is a Pakistan-based multi category foods company. The Company is principally engaged in the manufacture and sale of food products. The Company offers approximately 250 products in over 10 categories. The Company offers recipe masala jars, pickles, frozen meals, ketchup, jams, rice, basic spices, salt, chutneys and sauces, golden fried onions, and ginger and garlic pastes. It also offers desserts, which include sweets, such as kheers and faloodas, and contemporary desserts, such as jellies and custards. In addition, the Company offers a range of approximately 50 recipes, such as biryanis, curries, barbeque items and kababs. It offers a range of savory snack mixes and seasonings, such as chat masala, dahi bara and pakora, and masala snax, including chilli chips, barrek sev, Karachi mix and moong dal. The Company's subsidiaries include National Foods DMCC, National Foods Pakistan (UK) Limited and National Epicure Inc.

Unilever Pakistan Foods

Unilever Pakistan Foods Limited is a Pakistan-based company, which manufactures and sells consumer and commercial food products under brand names of Rafhan, Knorr, Energile, Glaxose-D and Food solutions. The Company's brands include Blue Band, Brookebond Supreme, Clear, CloseUp, Comfort, Cornetto, Domex, Dove, Fair & Lovely and Fruttare. The Company's product range covers soups, bouillons, sauces, noodles and complete meals. It produces frozen foods in Europe, under the Findus brand in Italy, Birds Eye in the United Kingdom and Iglo in other European countries. It offers margarine and spreads in European countries and North America, with brands, such as Becel (the Netherlands), Flora (the United Kingdom) and Take Control (the United States). It also offers home and personal care products, including cleansing and hygiene products. Its home care products include Brilhante, Cif, Comfort, Domestos, Omo, Skip and Snuggle. The Company is a subsidiary of Conopco Inc.

Provider
Intermarket Securities Limited
Intermarket Securities Limited

​Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.

Analysts
Yusra Beg

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