Author Topic: MATCO -- Matco Foods Pvt. Ltd.  (Read 735 times)

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Offline MZ

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MATCO -- Matco Foods Pvt. Ltd.
« Reply #-1 on: June 17, 2017, 01:03:11 PM »
All about Matco foods Pvt. Limited.

Matco Foods is an IFC-investee company with over 50 years of experience in the rice industry, and a global portfolio of more than 150 corporate customers. As the largest basmati rice exporter from Pakistan, its flagship brand “Falak Rice” is available in more than 45 countries worldwide. It also exports private label brands to over 60 countries in the world.
As a leading agribusiness in the region, Matco aims to serve the changing needs and preferences of global consumers and therefore holds Organic Certification from the United States Department of Agriculture (USDA) as well as the European Union (EU).

http://www.matcofoods.com

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MATCO -- Matco Foods Pvt. Ltd.
« Reply #-1 on: June 17, 2017, 01:03:11 PM »

Offline MZ

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Offline MZ

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Re: MATCO -- Matco Foods Pvt. Ltd.
« Reply #1 on: January 17, 2018, 01:52:31 PM »

Matco Foods Limited (MATCO): Subscribe to IPO for slight upside
Wednesday, 17 January 2018

By: Ismail Iqbal Securities (Pvt.) Limited
Matco Foods Limited (MATCO), engaged in processing and export of rice, is scheduled to go for book building on January 23-24, 2018. Floor price of PKR 26 per share has been set, which gives it a trailing P/E multiple of 8.5x, which is lower than its peers operating in Food sector at an average P/E of 18.3x.However, there is no local listed company operating is rice industry. We like Matco because i) it’s undergoing expansion in it Rice Glucose/ Syrup and Rice Protein Plant, ii) except for one listed entity namely Habib ADM, it’s competitors are only small, family owned business giving it supplier power, iii) it is the largest rice exporter operating in Pakistan and hence stands to gain from PKR devaluation, and iv) it has a diversified portfolio of products.
In addition to these factors, there are other factors too that can affect the valuation, such as i) the company intends to remain fully focused on international market of Rice Glucose/ Syrup and Rice Protein as it offers higher margins as compared to the domestic market, ii) the company will enjoy tax benefits if plant is commissioned before June 2019, iii) currently, majority of Glucose is extracted from corn, which is being replaced with Rice Glucose in Europe and US due to its least likeliness to cause allergy and iv) the company has already acquired the land and is in process of final negotiation with contractors.
Further, IFC’s shareholding post IPO will be around 15%, which it can’t dispose of for the period of one year from the date of IPO. One reason for concern is that Basmati Rice exports are heavily dependent on international prices, where the company may face direct competition from India given its low pricing. However, this remains less of an issue for the period of up to 2 years (2 rice production cycles) due to de-facto ban by European Union (EU) Commission (ban due to higher level of Tricylazole (fungicide) in Basmati rice), which is mainly found in Indian Basmati rice. Secondly, Rice processing and exports offer very low net margins of around 2% to 4%. Given the trailing multiple of MATCO at its floor price, the Food sector’s P/E and the company’s future earnings potential, we recommend investors to subscribe till a value of PKR 29. Please note that our recommendation is based on the FY19 earnings estimate given by the management, which we find to be reasonable; we have not created a financial model ourselves.
The management expects diversification towards Rice glucose to add value to its bottom line due to high margins as compared to its core business. Furthermore, Rice Glucose uses the by product (broken rice) of its core business as its raw material, which is currently being sold at very low margins due to its properties and very low demand.

Offline Farzooq

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Re: MATCO -- Matco Foods Pvt. Ltd.
« Reply #2 on: January 19, 2018, 04:37:10 PM »

In the first public listing of CY18, Matco Foods Limited (MATCO) will auction 29.1mn share to the
public. The issue will be made through book building and IPO process scheduled between Jan 29,
2018 - Jan 30, 2018. Company plans to raise PKR758mn for the expansion of its existing
production facility (25% of the post issued paid up capital) with a base price of issue set at
PKR26/sh. The company plans to utilize the IPO proceeds to expand its Rice Glucose / Syrup and
Rice Protein production capacity. Currently the country has a documented demand of ~60,000MT
with a supply standing at ~55,000MT. The new capacity is expected to come online in CY19
however may be delayed due to technical and regulatory reasons. The scrip will be offered at a
base PER multiple of 8.7x (calculated on the basis of base price and the CY18 estimated earnings)
which would be at a significant discount from the peer average.

http://www.bipldirect.com/downloads/research/MS16-01-2018.pdf
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