Meat Alternatives Transformation And Premium Segments Will Drive Recovery

Key Takeaways

• Transformation efforts in meat alternatives and premium product expansion are strengthening margins, profitability, and market share despite tough competition and weak low-income segment volumes.
  
• Growing demand for health-focused and alternative protein foods is accelerating international sales and improving product mix, supporting sustainable long-term top-line growth and stabilized margins.
  
• Escalating input costs, shifting consumer trends, competition, and market concentration threaten Monde Nissin's core segment growth, margins, and long-term earnings stability.

Catalysts

An investment holding company, manufactures and sells food products and beverages in the Philippines, Thailand, New Zealand, Singapore, the United Kingdom, and internationally.

• Ongoing transformation initiatives in the Meat Alternatives segment-particularly the "Transform to Win" program focused on supply chain efficiencies, cost savings, and SKU rationalization-are delivering sustained gross margin expansion and EBITDA positivity; if this positive momentum continues (as recent results and July growth suggest), it could drive a meaningful recovery in consolidated margins and net profit.
  
• Rising demand for health-conscious and alternative protein foods, as evidenced by 42% snacking growth in the U.K. Quorn portfolio and increased category penetration, positions Monde Nissin for accelerated top-line growth and improved mix, benefiting both international revenues and blended gross margins.
  
• Expansion and penetration in modern trade and premium product lines (e.g., noodle "cups" and value-added SKUs) are driving market share gains despite a competitive environment and weak volumes in low-income segments, supporting robust revenue growth and offsetting pressures in other product categories.
  
• Significant cost relief from locked-in, sequentially lower palm oil and wheat prices for H2 2025 should translate to margin recovery as consumption of older inventory tapers, improving gross margins and operating earnings in the latter part of the year.
  
• Broader household penetration and category expansion in biscuits and culinary products (e.g., Mama Sita's oyster sauce reaching 61% household penetration) indicate sustainable double-digit or high single-digit volume growth, enhancing recurring revenue and stabilizing margins.

Monde Nissin Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Monde Nissin's revenue will grow by 4.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.9% today to 18.5% in 3 years time.
• Analysts expect earnings to reach ₱17.9 billion (and earnings per share of ₱0.68) by about August 2028, up from ₱767.3 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 13.6x on those 2028 earnings, down from 167.4x today. This future PE is greater than the current PE for the PH Food industry at 9.4x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 11.22%, as per the Simply Wall St company report.

Monde Nissin Future Earnings Per Share Growth

Risks

• Intensifying competition in the instant noodle segment, including increased price promotions from rivals, could pressure Monde Nissin's core market share and force margin-eroding responses, negatively impacting revenue and net margins over time.
  
• Persistent volatility and steep increases in key input costs-especially coconut oil (up 109% year-over-year, now 7% of COGS for APAC BFB)-driven by climate (El Niño, unpredictable rainfall), rising non-food demand, and biodiesel mandates, may cause sustained gross margin compression and lower overall earnings.
  
• Structural shifts in consumer behavior, with less affluent segments reducing their spend on value noodle products and increased health consciousness (leading to declines in instant mami/soupy noodles), could erode revenue growth in Monde Nissin's largest product category and limit long-term volume expansion.
  
• The Meat Alternative division continues to face volume declines (Q2: -8.5%), with recent sales value improvement largely driven by pricing and product mix rather than sustainable underlying demand; if category stagnation persists, impairment risk and margin dilution could weigh on consolidated long-term earnings.
  
• High reliance on the Philippine market leaves Monde Nissin exposed to localized economic slowdowns, FX volatility (notable declines in core net income from unfavorable peso movements in H1 2025), and regulatory risks, which could undermine revenue stability and predictability of net profits.

Valuation

• The analysts have a consensus price target of ₱9.791 for Monde Nissin based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₱13.3, and the most bearish reporting a price target of just ₱6.5.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₱96.4 billion, earnings will come to ₱17.9 billion, and it would be trading on a PE ratio of 13.6x, assuming you use a discount rate of 11.2%.
• Given the current share price of ₱7.15, the analyst price target of ₱9.79 is 27.0% higher.
• 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.