Pure Foods: About to Become Purely Undervalued

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Company president provides his estimated company value

Last week, San Miguel President Ramon Ang provided an estimated value between $9 billion to $10 billion once Pure Foods combines with San Miguel’s food, beer and liquor businesses.

At today’s exchange rate, this estimated value would fall to ~₱471 billion.
If Pure Foods reach this estimated value it would propel the company from its current 34th largest company to somewhere between Gokongweis’ JGS Summit Holdings and Ayala’s Bank of the Philippine Islands and becoming part of the top 10 largest companies in the Philippines.

The specifics are yet to be provided by Pure Foods and/or San Miguel.

Should Pure Foods continue as planned, raise $1.5 billion (₱78.5 billion) through share issuance, and peg a speculated rights offering at ₱615 (average price of Pure Foods shares in the past thirty days), the company would need to add about 128 million shares to its already diluted 181.7 million shares would result into 309 million shares outstanding.

This would indicate a ₱1,607/share as per a midpoint to Mr. Ang’s valuation ($9.5 billion divided by 309 million shares). This would suggest a possible 160% return from today’s Pure Foods share price of ₱618.50 (2/18/2018).

Disclosure: I have shares in Pure Foods.

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