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Century Pacific IPO priced P13.75/share

Century Pacific Foods Inc. has pegged its P3.16-billion initial public offering price at P13.75 per share, equivalent to a price to earnings ratio of about 20 times — lower than the industry average of 22.9 to 27.8 times.

DA Market Securities said this merits a buy rating with a target price of P15.34 to P18.62 per share assuming it aims for industry price-earnings ratio.

Century Pacific is forecast to earn a net income of P1.49 billion this year from revenues amounting to P21.7 billion.

Capital expenditures is seen to more than double (113 percent) from P342 million to P729 million mainly to complete a tin can manufacturing factory for 20-25 percent of its canning requirements, the expansion of its dairy and mix factory to double capacity, and the overall improvement & maintenance facilities.

DA Securities noted that Century Pacific has market leadership in the consumer-based Philippine economy, which has the largest canned and preserved food industry in southeast Asia.

The company corners a 54 percent share of the canned fish and seafood market and a leading 37 percent of the canned meat and meat products market.

It also noted the firm’s multi-category, multi-brand product portfolio with a strong record of product innovation and successful new product introduction. In 2014, it will start marketing and distributing beverage products such as coconut water.

Century Pacific also has a multi-pronged growth strategy through cost improvement, expansion of distribution network and achieving economies of scale to grow local and international market share in existing segments and penetrate new ones.

DA Securities said the firm has a highly scalable export business that supplies processed tuna to leading international companies and distributes private label and branded products to high growth markets across North America, Europe, Asia, Australia, and the Middle East.

The company ranks first as a tuna exporter with a 34.20 percent market share. (James Loyola)