Century Pacific Food, Inc (CNPF) - IPO

CNPF: One good catch!

Largest canned food producer in the Philippines. CNPF is the largest producer of canned foods  in the Philippines whose brands have established market-leading positions. The company itself was incorporated on October 25, 2013 and inherited its various businesses from the Century Group. The company has four main business segments: canned and processed fish, canned meat, dairy and mixes, and tuna export. Following the company’s IPO, the Po family will own approximately 89.7% of CNPF through their whole ownership of CNPF’s parent company, Century Canning Corp.

Portfolio of market leading brands. CNPF carries multiple brands across its business segments. It is the market leader in canned tuna with a dominant 87% market share. The company also has leading market share in corned meat (43%), luncheon meat (26%) and vienna sausage (28%). Among its top-selling brands are Century Tuna and 555 for canned and processed fish, Argentina and Swift for canned meat, and Angel and Birch Tree for canned and powdered milk. CNPF also exports private label tuna products as well as some of its branded products overseas. 

IPO priced at Php13.75/sh. For its upcoming IPO, CNPF will offer up to 229.7Mil new common shares at Php13.75/sh. At this price, the company will be able to raise up to Php3.1Bil in gross proceeds with its market capitalization reaching Php30.7Bil. The bulk of proceeds from the offer will be used for the payment of financial obligations. The company will use a portion of the proceeds for capital expenditures to increase production capacity and cost efficiency, for working capital and for potential acquisitions. 

Multiple avenues for growth. CNPF will continue to develop its product portfolio, with new brands and acquisitions driving growth. The company also plans to expand its distribution network with particular focus in Visayas, Mindanao and other underserved areas. Finally, CNPF plans to increase the number of partners for its private label export business as well as enter into more distribution agreements with retailers in the US to export its branded products.

Significant margin improvement from backward integration. CNPF plans to use a portion of its IPO proceeds for the construction of a tin can manufacturing facility. According to CNPF, packaging costs currently represent 17% of total production costs and the tin can facility is expected to reduce these costs by 15% to 20%. The factory is expected to cost Php457.6Mil and is scheduled to be completed by 3Q14.

Source: COL Financial