By Pierce Oel A. Montalvo, Researcher

Shares of Monde Nissin Corp. climbed last week after the Philippine food manufacturer released its third-quarter earnings results and announced a higher cash dividend. The weekly gain stood out in a market where headline indices rose only modestly, underscoring how company-specific results and capital-return news can drive a single stock's performance.

The stock rose 7.2% to close at P6.40 on Friday, up from P5.97 a week earlier, outperforming the Philippine Stock Exchange's (PSE) industrial sector index and the benchmark PSE index (PSEi), which gained 1.5% and 1.4%, respectively.

Monde Nissin ranked as the 12th most actively traded stock for the week, with 68.08 million shares worth P418.69 million changing hands, based on PSE data. Since the start of the year, the stock has gained 10.3%, compared with declines of 13.8% for the industrial sector index and 4.8% for the PSEi — a spread that shows the company's shares have moved against the broader market's direction this year.

Arabella M. Resado, equity analyst at Regina Capital Development Corp., said the company's earnings announcement last Wednesday encouraged investors to accumulate shares amid signs of improving financial performance.

Third-quarter attributable net income — the portion of profit belonging to the parent company's shareholders — rose 1.8% to P2.29 billion from P2.25 billion a year earlier, while consolidated revenues grew 8.2% to P23.6 billion from P21.81 billion.

For the first nine months, attributable net income increased 21.9% to P8.12 billion from P6.66 billion in the same period last year. Consolidated revenues rose 7.3% to P67.89 billion from P63.26 billion, supported by the branded food and beverage business, which generated P56.76 billion in sales.

"With the stock trading close to its 52-week low, traders who anticipated good results for the third quarter probably saw this as a good opportunity to build positions," Ms. Resado said in a Viber message. A 52-week low marks the lowest level at which a stock has traded over the past year, a reference point traders use to judge where a share sits within its yearly range.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said Monde Nissin's 16.1% growth in core attributable earnings — a measure that excludes one-off items to show underlying performance — was a key factor behind the stock's advance, supported by stronger domestic operations and improved profitability at its meat alternatives business, Quorn Foods.

He added that the gains also followed a 5.6% decline in the stock on Oct. 27, with the earnings announcement encouraging investors to buy shares after the earlier sell-off.

"I would characterize the recovery as increasingly supported by fundamentals rather than purely technical bargain hunting. However, whether the rebound can be sustained will depend on continued earnings delivery, stronger underlying demand and the company's ability to protect margins against persistent inflationary pressures," Mr. Arce said in a separate Viber message.

Alongside its earnings, Monde Nissin declared a cash dividend of P0.26 per share, 8.3% higher than its previous payout, with payment scheduled for Dec. 23.

Mr. Arce said the company is "well-positioned" to sustain higher dividend payments while funding investments, citing its P16.2 billion in cash and cash equivalents, P2.4 billion in outstanding debt, and P11 billion in cash flow generated during the first nine months.

"The dividend suggests a more balanced capital allocation strategy, where management can return excess cash to shareholders while preserving resources for growth, operational improvements and potential economic uncertainties," he said.

Ms. Resado said the dividend was consistent with the company's policy of distributing 60% of the preceding fiscal year's net income to shareholders — a payout framework pegged to the prior year's profitability.

"Rather than signaling a shift toward aggressive cash hoarding or risky acquisitions, the distribution indicates that management appears comfortable returning excess operating cash flow to shareholders while keeping a substantial cash balance available for ongoing capital expenditures, working capital requirements, and debt servicing," she said.

Despite the improvement in earnings, both analysts said inflation and weaker consumer purchasing power could weigh on Monde Nissin's sales volumes and margins. Philippine headline inflation accelerated to 7.8% in October from 7.2% in September, its highest level in four years.

Ms. Resado said subdued sales volumes have become common in the fast-moving consumer goods sector — the category of everyday staples that shoppers buy on a recurring basis — as households face higher prices.

"In this sticky economic environment, Monde Nissin's ability to deliver positive 2% to 3% volume and mix expansion is already good news, or at least not as bad as expected," she said.

She cited the 2.8% volume and mix growth of Monde Nissin's Asia-Pacific branded food and beverage business in the first nine months, as well as the 2.2% constant-currency sales growth of Quorn — volume and mix figures tracking units sold and sales composition, while the constant-currency measure strips out exchange-rate effects.

Mr. Arce said sustained volume growth, an improved product mix, and stronger sales at Quorn would be important to the company's longer-term earnings performance. "Cost efficiencies can support the recovery, but stronger demand will be essential to sustain it."

He projects the company's full-year 2026 earnings at P11 billion to P11.5 billion, with potential upside from stronger domestic sales volumes, a favorable product mix, and margin improvements. However, he flagged inflation and weaker consumer purchasing power as remaining risks to performance.

Ms. Resado said earnings for the remainder of the year could benefit from the momentum recorded in the third quarter, supported by the company's cash reserves and its secured wheat and palm oil requirements.

For the week ahead, Ms. Resado placed support for the stock at P5.80 and resistance at P6.40 — price levels where traders commonly expect buying interest or selling pressure to firm up. Mr. Arce identified immediate support at P6.20 to P6.30, with the P6 level serving as secondary support in the event of profit-taking.

"On the upside, the P6.40 area is the immediate level to monitor following the recent advance. A sustained move above this level, accompanied by healthy trading volume, could open the way toward the P6.50 to P6.70 area," Mr. Arce said.

Source: Bworldonline