Aquafeed Expansion And Integration Risks Will Shape Earnings Trajectory Over The Coming Years

Catalysts

About AlicorpA

AlicorpA is a diversified Latin American consumer goods and B2B company, with leading brands across home care, food, and aquafeed, supported by integrated manufacturing and distribution capabilities.

What are the underlying business or industry changes driving this perspective?

• Although the acquisition of Jaboneria Wilson and related distributors broadens AlicorpA's footprint in Ecuador, Peru and Colombia, the complexity of integrating these assets in a still volatile regional macro environment could delay expected synergies and weigh on operating leverage. This may limit upside to revenue growth and EBITDA expansion.
• While Aquafeed is benefiting from volume growth, higher value added products and resilient shrimp and salmon export demand, the business remains exposed to potential reversals in export conditions and raw material pricing. These factors could compress margins and introduce greater volatility into consolidated earnings.
• Despite recent share gains and premiumization in detergents and other core consumer categories in Peru, intensifying price and tier based competition from local and foreign players may force higher promotional spending and marketing investments. This could pressure net margins even if top line growth remains healthy.
• Although AlicorpA is reducing leverage and maintaining solid liquidity through disciplined cash generation, ongoing buybacks, dividends and acquisition led expansion may constrain balance sheet flexibility in a downturn scenario. This could limit the ability to fund growth capex and dampen future net income growth.
• While the company has demonstrated the ability to navigate macro dislocations in Bolivia and other international markets through pricing and portfolio optimization, persistent inflation, FX constraints and informal trade could cap volume recovery and keep international EBITDA contribution structurally below prior cycles.

Assumptions

This narrative explores a more pessimistic perspective on AlicorpA compared to the consensus, based on a Fair Value that aligns with the bearish cohort of analysts. How have these above catalysts been quantified?

• The bearish analysts are assuming AlicorpA's revenue will grow by 8.2% annually over the next 3 years.
• The bearish analysts assume that profit margins will increase from 5.7% today to 6.1% in 3 years time.
• The bearish analysts expect earnings to reach PEN 899.0 million (and earnings per share of PEN 1.49) by about December 2028, up from PEN 662.4 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bearish analyst cohort, the company would need to trade at a PE ratio of 8.0x on those 2028 earnings, down from 8.3x today. This future PE is lower than the current PE for the PE Food industry at 8.3x.
• The bearish analysts expect the number of shares outstanding to decline by 2.55% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 14.29%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company is guiding to strong near term momentum with full year 2025 revenue growth of between 14% and 16%, supported by double digit volume expansion in B2B, solid growth in Consumer Goods Peru and a 36% volume increase in Aquafeed. If this is sustained, it could drive revenue and earnings materially above a flat share price scenario.
• Aquafeed has delivered a 74% increase in EBITDA on the back of recovering shrimp prices, growing shrimp and salmon exports and a shift toward higher value added solutions. If these secular trends in global seafood demand persist, they could structurally lift margins and consolidated earnings.
• The successful integration of Refineria del Espino and the acquisition of Jaboneria Wilson, along with distributors in Peru and Colombia, are expanding AlicorpA's category breadth and geographic footprint. Over time, the incremental scale and synergies from these inorganic moves may support higher operating leverage, improving net margins and earnings.
• Management has steadily reduced leverage from 2.5 times net debt to adjusted EBITDA to 2.0 times while funding acquisitions, buybacks and dividends largely from internal cash generation. Ongoing discipline in working capital and CapEx could enhance financial resilience and free cash flow, supporting a higher equity valuation.
• Market share gains in key Peruvian categories such as detergents, sauces and pastas, combined with revenue growth management and premiumization initiatives, suggest durable brand strength that can underpin pricing power and mix improvement. This would likely translate into sustained gross margin expansion and rising EBITDA.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bearish price target for AlicorpA is PEN8.6, which represents up to two standard deviations below the consensus price target of PEN11.05. This valuation is based on what can be assumed as the expectations of AlicorpA's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of PEN13.5, and the most bearish reporting a price target of just PEN8.6.
  
• In order for you to agree with the more bearish analyst cohort, you'd need to believe that by 2028, revenues will be PEN14.7 billion, earnings will come to PEN899.0 million, and it would be trading on a PE ratio of 8.0x, assuming you use a discount rate of 14.3%.
  
• Given the current share price of PEN9.5, the analyst price target of PEN8.6 is 10.5% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.