142:HK Quick Pitch
First Pacific Co. Ltd. is a Hong Kong-based investment management and holding company with operations located in Asia.
142:HK #QuickPitch mcap= HKD12.9B, price HKD3 / share
142:HK #Pitch:
First Pacific (FPC) is a conglomerate with a diverse portfolio of businesses, including Indofood, Metro Pacific, PLDT, and PLP. Indofood, a subsidiary of FPC, is the world's largest noodle company with a dominant market share in Indonesia, a country of 270 million people.
Indofood's strong distribution and marketing advantages have allowed it to maintain a significant market share in other large markets such as India, Pakistan, Japan, and South Korea. Indofood exhibits impressive financial performance, boasting returns on capital of more than 50% and operating margins comparable to global consumer giants like Unilever, Inbev, and Procter and Gamble.
The acquisition of Pinehill in 2020 positions Indofood for growth in markets like Nigeria, Egypt, Turkey, and Saudi Arabia, with a consumer base of over 1.0 billion people.
FPC's 40% stake in Indofood is valued at $3.0 billion, which is 180% of FPC's market capitalization. Metro Pacific, another FPC subsidiary, owns a range of infrastructure assets in the Philippines, presenting growth opportunities in an emerging economy. FPC's stake in Metro Pacific, when delisted, is expected to be valued at book value, potentially providing an upside for FPC.
PLDT, an integrated telecom company, offers profitability despite large investment needs, and FPC holds a stake valued at 75% of its market cap. PLP, another subsidiary that is an efficient power generation company in Singapore, contributes to FPC's intrinsic value, representing over 20% of FPC's market cap.
142:HK valuation:
The intrinsic value of FPC, after accounting for its corporate debt, could be more than 3 times its current market price.
The primary driver of FPC's attractiveness is Indofood, which is the largest noodle company globally and owns the 7th most consumed brand, Indomie. Indofood's potential for growth lies in increasing noodle consumption per capita in regions where it is already a leader, such as Africa, the Middle East, and Southeastern Europe.
Even without significant growth in these regions, FPC is undervalued, trading at 3.3 times price-to-earnings (P/E) and a dividend of around 7%.
FPC offers substantial upside potential based on the sum of its parts, including its stakes in Indofood, Metro Pacific, PLDT, and PLP. All of FPC's assets are expected to appreciate over the coming years, therefore I find a big margin of safety.
Expected Gain: The potential gain could reach at least 200% based on the sum of its parts.