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Potential Targets in Food Sector
• Aranca – Overview
• Situation Overview – Asia-Pacific Food & Beverage Industry
• Potential Targets – Short Profiles
Key Discussion Points
ABC & CO. 2
Aranca – Company Overview
ABC & CO. 4
Company Overview Key Management
• Founded in UK in 2003, Aranca is a provider of customized investment research, business research, valuation services and intellectual property research services
• The company research solutions includes:
• Investment Research: Provides customized, equity research outsourcing, financial research outsourcing, economic research outsourcing and analytical support
• Business Research: Provides customized research solutions on markets, competition, customers, supply chain, innovation and technology trends
• Valuation and Advisory Services: Provides defensible valuations and fairness opinions for tax compliance and financial reporting (US GAAP/IFRS)
• Intellectual Property Research: Provides intellectual property research, analytics, valuation and out-licensing support services
• Company’s clientele includes Fortune 500 corporations, large financial institutions like investment banks, hedge funds, PE/VC firms, brokers, and startup firms
• The company has global presence including in the US, Europe and Middle East, and a state-of-the-art delivery center in Mumbai, India
Hemendra AranFounder & CEO• Served at Infosys where he worked with global
corporations such as Goldman Sachs, Reebok and Thomson Electronics
• Alumnus of London Business School (MBA), Haas School of Business, University of California, Berkeley and Indian Institute of Technology (Madras)
Madhusudan RajagopalanDirector, India Operations• Served as a management consultant with
Accenture where he handled strategy and business performance improvement assignments
• Alumnus of the Indian Institute of Management, Bangalore and IIT Madras (B.Tech)
Neeraj BhardwajDirector, Business Development• Over 10 years of experience in financial services,
outsourcing and consulting
• Founded a business process outsourcing company after serving as Bank Analyst at with the Bank of England
• Holds a Bachelors in Finance from the London School of Economics and an MBA from London Business School
Source: Company Website
Aranca – Experience & Coverage
ABC & CO. 5
Sector Experience Across Regions Coverage
Source: Company Website
Sector / IndustryNorth
America
Latin
America
Western
Europe
Eastern &
Central
Europe
Middle
East &
Africa
Asia
Pacific
Aerospace & Defense • • • •
Automobiles & Components • • • •
Banking • • • • • •
Capital Goods • • • • •
Chemicals • • • •
Construction & Engineering • • • •
Diversified Financials • • • • • •
Energy Equipment & Services • • • • •
Food Beverage & Tobacco • • • •
Health Care Equipment & Services • • • •
Hotels Restaurants & Leisure • • • • • •
Household & Personal Products • • • •
Household Durables • • • •
Insurance • • • • •
IT Software & Services • • • •
Media • • •
Metals & Mining • • • • • •
Oil & Gas • • • • • •
Paper & Forest Products • • • •
Pharmaceuticals • • • • •
Real Estate • • • • • •
Retailing • • • • • •
Semiconductors & Equipment • • •
Telecommunication Services • • • • • •
Textiles, Apparel & Luxury Goods • • • •
Transportation & Logistics • • • • • •
North America34%
Asia Pacific16%
Middle East & Africa18%
Europe18%
Latin America14%
Coverage by Geography
Large Cap32%
Mid Cap46%
Small Cap22%
Coverage by Market Cap
Aranca – Assignments Handled
ABC & CO. 6
Selected Assignments Handled
Source: Company Website Case Studies
Private Equity / Venture Capital Firms
Identification and profiling of companies in target
sectors with specific technology capabilities
PE – VC Research
Identifying investment opportunities in the global
Toll Road theme
Investment Banking Analytics
Identifying potential acquisition targets in the
bakery segment in Europe
Enterprises
Profiling and short-listing suitable acquisition
candidates in the chemicals sector
PE – VC Research
Dedicated analyst support – preparation of sector and
thematic report, PPM documents and monthly
newsletters
Equity Research
Investment screening of stocks based on
fundamental parameters –quantitative & qualitative
$174.0
$1.4
$112.2
$15.0
$21.8
$52.0
$44.7
$12.7
$11.5
$141.8
$24.6
$19.1
$47.5
$18.1
Alcoholic Drinks
Baby Food
Beer
Bottled Water
Confectionery
Dairy Products
Frozen Food
Functional Drinks
Juices
Meat, Fish & Poultry
Milk
Savory Snacks
Spirits
Wine
2009 Market Size
F&B – Industry Overview
ABC & CO. 8
Industry Overview Asia-Pacific F&B Market
• The global food and beverage (F&B) industry was valued at $5.7 trillion in 2008 and is expected to increase to more than $7 trillion by 2014, at a CAGR of 3.5%
• The global food products industry, which consists of agricultural products and packaged foods, generated revenues of $3.2 trillion in 2008 and is expected to increase at a CAGR of 4.6% to $4 trillion by 2013
• The global beverage industry, which consists of soft drinks, beers, ciders, spirits and wines, was valued at $1.4 trillion in 2008 and is expected to rise at a CAGR of 2.6% to $1.6 trillion by 2013
• The share of Asia Pacific region in the global F&B industry's value is projected to increase from 31.5% in 2011 to 34.2% by 2015
• The developing countries in Asia Pacific region including India, China and Indonesia are likely to drive the sales of processed food in Asia
• India’s F&B market was valued at $182 billion in 2007-08 while the food processing sector alone was worth $72 billion in 2008
• China’s food processing sector is valued at $50 billion in 2008
($ in billions)
Source: IMAP, ASSOCHAM-TechSci study, and Datamonitor
Industry Value Chain
• This industry is involved in the production and collection of raw agricultural commodities such as rice, wheat and corn
• Food processing is an integral part of the value chain and involves the processing of raw food commodities into forms that can be easily distributed and sold to consumers. This division is further divided into the following:
• Food, Major Diversified• Beverages, Alcoholic & Non-
Alcoholic• Confectioners
• This is the final stage of the F&B value chain and entails the distribution of finished or near-finished food products to consumers. This industry includes:
• Grocers/Supermarkets• Restaurants• Casual & Upscale Restaurants
Farming
Processing
Distribution
F&B – Industry Trends
ABC & CO. 9
Source: IMAP
Key Trends
• Asia-Pacific is emerging as a major contributor of raw materials to the F&B industry
• Food purchases are shifting from staple foods rich in carbohydrates to more expensive foods such as meat and dairy products
• China, Russia and India have increased their production capacities
• China increased its wheat production capacity by 26% in 2003-07
• Russia raised its capacity by 45%
• At present, approximately 58% of produced food is consumed by developing countries
• This is expected to climb to 72% by 2050 supported by the fact that 37% of the world’s population currently lives in China and India
• Demand for cereals is expected to rise from the current 2.1 billion tonnes to more than 3 billion tonnes by 2050
• Demand for meat production is likely to grow by 200 million tonnes to 470 million tonnes over the same period
$697.4
$353.2 $324.7
$178.4 $84.5
$26.2
$1,032.8
$452.7 $386.7
$212.8
$101.9 $30.5
China India Russia Indonesia South Korea Malaysia China India Russia Indonesia South Korea Malaysia
2012 2017
Food Beverage
F&B –Geographic Overview
ABC & CO. 10
Asia-Pacific – Opportunities & Risk Factors
Source: Linklaters
Asia-Pacific – Major Countries F&B Market($ in billions)
Countries China India Russia Indonesia South Korea Malaysia
Market Size
Market Growth in Real Terms
Market Growth in % Terms
Production Base Potential
Highest Opportunity Lowest Opportunity
Growth Forecast Risk
Sovereign Risk
Corruption Risk
F&B Investment Restrictiveness
Quality of Investor Protection
Highest Risk Lowest Risk
Ris
k Fa
cto
rsO
pp
ort
un
ity
Fact
ors
Potential Targets
ABC & CO. 12
Company Business OverviewEngages in the manufacture and sale of snack confectionary, bakery food and cereal food. Operates in two business segments• Food Manufacture and Sale segment manufactures and sells potato
series snacks, bakery foods and prepared food bread, among others
• Others segment is engaged in the operation of logistics, planning, production and dispatching of sales promotion tools
Source: Company Website, Reuters, Bloomberg, and Google Finance
Financial InfoMarket Info
Calbee, Inc.Founded: 1949HQ: Tokyo, JapanCEO: Akira Matsumoto
(JPY in millions)
Stock Price (11/1/13) ¥2,502.00
Market Cap ¥330,073
LTM P/E 31.6x
LTM P/Sales 1.8x
• A meat products provider offering high-temperature meat products, low-temperature meat products, fresh meat and frozen meat
• Also offers technical consulting services, logistics services and chemical products
• Mainly operates its businesses within domestic markets
Henan Shuanghui Invt & Dev. Co LtdFounded: 1988HQ: Henan, ChinaChairman: Wan Long
Engages in production and distribution of dairy products and mixed feedstuffs• Major products include liquid milk products, including milk, dairy
drinks, milk and dairy drinks for children; milk powder and milk products, including milk powder for infants, milk powder for adults, soybean powder and dairy snacks, as well as cold drink products and mixed feedstuffs, among others
Inner Mongolia YiliFounded: 1993HQ: Mongolia, ChinaChairman: Pan Gang
A rice miller and Basmati Rice exporter. Operates in two segments:• Agri segment engages in agri commodities, such as rice, cotton,
seed, bran and bran oil• Energy segment is engaged in power generation from wind turbine
and husk based power plantOffers number of brands to its customers, such as India Gate, Doon, Nur Jahan, Indian Farm, Bemisal, Aarati, Unity, Lotus, Taj Mahal Tilla, Shubh Mangal, Necklace and Lion
KRBL Ltd.Founded: 1988HQ: Delhi, IndiaMD: Anil Kumar Mittal
(JPY in millions)
Revenue ¥183,666
Gross Margin % 43.9%
EBITDA % 12.8%
LTM EPS ¥87.43
(CNY in millions)
Stock Price (11/4/13) ¥45.28
Market Cap ¥101,205
LTM P/E 29.5x
LTM P/Sales 2.4x
(CNY in millions)
Revenue ¥43,148
Gross Margin % 19.1%
EBITDA % 10.7%
LTM EPS ¥2.13
(CNY in millions)
Stock Price (11/4/13) ¥39.56
Market Cap ¥80,695
LTM P/E 27.1x
LTM P/Sales 1.8x
(CNY in millions)
Revenue ¥44,831
Gross Margin % 30.0%
EBITDA % 5.9%
LTM EPS ¥1.51
(INR in millions)
Stock Price (11/3/13) ₹ 29.65
Market Cap ₹ 6,993
LTM P/E 4.9x
LTM P/Sales 0.3x
(INR in millions)
Revenue ₹ 22,628
Operating Margin % 37.0%
Net Margin % 0.5%
LTM EPS ₹ 5.37
(Public)
Potential Targets
ABC & CO. 13
Company Business OverviewEngages in the food manufacturing business• Products portfolio consists of pies under the brand names of Choco
Pie, Fresh Pie and Haute; snacks under the brand names of POCHACHIP, Cornchip HOT, Oh! Gamja, SWINGCHIP, Toonies and others; biscuits under the brand names of Gosomi, Choco Chip Cookie, Digesta, Bebe, O'Tato and others, and chocolates under the brand names of Mini Pole, Eggmon, Choco Boy, To You, Hotbreak Chocobar and others, as well as candies and gums
Source: Company Website, Reuters, Bloomberg, and Google Finance
Financial InfoMarket Info
Orion CorpFounded: 1956HQ: Seoul, South KoreaCEO: Sang Woo Kim
Engages in the manufacturing and marketing of cocoa ingredients and consumer chocolate confectionery products and investment holding. Operating segments include:• Branded Consumer Division engages in the manufacture and
marketing of chocolate confectionery products• Cocoa Ingredients Division, engages in the manufacture and
marketing of a range of speciality cocoa butter, liquor and powder
Petra Foods Ltd.Founded: 1984HQ: SingaporeCEO: Chuang Tiong Choon "John"
• An integrated oilseed solvent extraction and edible oil refining company
• Engages in processing of oil-seeds and refining of crude oil for edible use
• Produces oil meal, food products from soya and value added products from downstream and upstream processing
• Manufactures edible oils, vanaspati, bakery fats and soya foods
Ruchi Soya IndustriesFounded: 1986HQ: Mumbai, IndiaMD: Dinesh Shahra
Specializes in the production and distribution of instant noodles, beverages and baked goods. Operates in following segments:• Instant noodles segment provides bowl noodles, packet noodles
and fried crispy noodles with pickled series, and Lu Xiang series• Beverages segment provides diluted juices, carbonated drinks,
ready-to-drink tea, bottled water, fruit juice drinks, and milk tea• Instant food segment provides sandwich crackers, muffins, egg rolls
and leisure puffed food made of potatoes
Tingyi Cayman Islands Holding CorpFounded: 1991HQ: Tianjin, ChinaCEO: Wei Ing-Chou
(SGD in millions)
Stock Price (11/5/13) $3.48
Market Cap $2,151
LTM P/E 32.1x
LTM P/Sales 2.4x
(SGD in millions)
Revenue $733
Gross Margin % 24.2%
EBITDA % 13.2%
LTM EPS $0.02
(INR in millions)
Stock Price (11/5/13) ₹ 34.15
Market Cap ₹ 11,875
LTM P/E 4.2x
EV/EBITDA 1.1x
(INR in millions)
Revenue ₹ 298,710
EBITDA % 3.5%
Net Margin % 0.9%
LTM EPS ₹ 8.19
(HKD in millions)
Stock Price (11/4/13) $22.20
Market Cap $126,461
LTM P/E 44.5x
LTM P/Sales 1.6x
(HKD in millions)
Revenue $78,062
Gross Margin % 29.9%
EBITDA % 10.8%
LTM EPS $0.51
(KRW in millions)
Stock Price (11/5/13) ₩1,009,000
Market Cap ₩6,154,792
LTM P/E 38.9x
LTM P/Sales 2.5x
(KRW in millions)
Revenue ₩1,844,649
Gross Margin % 41.9%
EBITDA % 14.4%
LTM EPS ₩26,479
(Public)
Potential Targets
ABC & CO. 14
Company Business OverviewA food manufacturing company. Operates in following major divisions:• Seafood division is engages in the purchase, processing and sale of
seafoods in domestic and overseas markets• Instant Noodles division provides cup and bag noodles• Low Temperature Food division manufactures/sells steamed &
roasted buckwheat noodles and commercial cocking products• Prepared Food division manufactures/sells of sterile packaged rice
Source: Company Website, Reuters, Bloomberg, and Google Finance
Financial InfoMarket Info
Toyo Suisan Kaisha LtdFounded: 1953HQ: Tokyo, JapanChairman: Tadasu Tsutsumi
A food product company involved in a range of food-related businesses, including the manufacture and distribution of branded consumer foods. Operates in following major divisions:• Branded consumer foods segment manufactures and distributes
salty snacks, chocolates, candies, biscuits, and bakery products• Agro-industrial products segment engages in hog & poultry
farming, producing animal feeds and animal health products Commodity food segment engages in sugar milling &refining
Universal Robina CorpFounded: 1954HQ: Manila, PhilippinesPresident: Lance Y Gokongwei
Engages in manufacturing, distribution and sale of rice crackers, dairy products and beverages, snack foods and other products. Segments:• Manufacturing & sale of Rice crackers, including sugar coated
crackers• Dairy products and beverages, including flavored milk, yogurt
drinks• Snack foods, including candies, popsicles and jellies, and ball cakes
Want China Holdings LtdFounded: 2007HQ: Shanghai, ChinaCEO: Tsai Eng-Meng
Operates in following major segments:• Palm and laurics: Merchandising & processing of palm oil & laurics• Oilseeds and grains: Merchandising and processing of edible oils,
oilseeds and grains• Consumer products: Packaging & sales of consumer pack edible
oils, rice, flour and grains• Plantation and palm oil mills: Oil palm cultivation and milling• Milling: Milling of sugarcane to produce raw sugar and by-products
Wilmar InternationalFounded: 1991HQ: SingaporeCEO: Kuok Khoon Hong
(JPY in millions)
Stock Price (11/5/13) ¥2,958.00
Market Cap ¥336,524
LTM P/E 14.3x
LTM P/Sales 0.9x
(JPY in millions)
Revenue ¥362,546
Gross Margin % 37.8%
EBITDA % 10.6%
LTM EPS ¥212.13
(PHP in millions)
Stock Price (11/5/13) 126.10
Market Cap 277,487
LTM P/E 26.5x
LTM P/Sales 3.5x
(PHP in millions)
Revenue 78,486
Gross Margin % 28.2%
EBITDA % 15.6%
LTM EPS 4.81
(HKD in millions)
Stock Price (11/4/13) $11.96
Market Cap $158,685
LTM P/E 32.5x
LTM P/Sales 5.7x
(HKD in millions)
Revenue $27,791
Gross Margin % 41.4%
EBITDA % 25.1%
LTM EPS $0.37
(SGD in millions)
Stock Price (11/4/13) $3.41
Market Cap $22,093
LTM P/E 12.6x
LTM P/Sales 1.8x
(SGD in millions)
Revenue $12,274
Gross Margin % 8.5%
EBITDA % 5.1%
LTM EPS $0.22
(Public)
Potential Targets
ABC & CO. 15
Company Business OverviewManufactures & supplies food & beverage products• Product lines include dairy drinks, bottled water, carbonated drinks,
bottled tea, juices, canned food, medicine and health care products, infant food, and snacks
• Designs, manufactures, and sells fashionable kids wear for newborns and children up to fourteen years of age
• Also owns and operates a boutique shopping mall
Source: Company Website and Bloomberg Businessweek
Key Products/Brands
Hangzhou Wahaha GroupFounded: 1987HQ: Zhejiang, ChinaFounder: Qinghou Zong
Operates as a wholesaler in the food industry• Merchandizing portfolio includes dried foods; chilled foods, such as
dairy products, yogurt, and desserts; and a line of frozen food products for professional and consumer markets
• Offers retail support services, which include provision of an informational common tool for sales promotion, a trading area analysis tool, and a sales promotion magazine
Nippon Access, Inc.Founded: 1952HQ: Tokyo, JapanCEO: Shigeharu Tanaka
Manufactures, markets, and sells biscuits and confectioneries• Offers glucose, milk, sweet and salted cream, wafer crème, cumin
seed, and cheese biscuits; toffees and hard-boiled candies in chocolate, mint, cola, and tropical fruit flavors; and snacks, including chips and wafers
Parle Products Ltd.Founded: 1929HQ: Mumbai, IndiaOwners: Chauhan family
Engages in the manufacture and sale of beverage and food products. The company three main areas of operation:• Producing alcoholic beverages (including MIDORI melon-flavored
liqueur)• Producing health food and supplement and non-alcoholic beverages• Running restaurant, fitness, and floral operations
Suntory Holdings Ltd.Founded: 1899HQ: Osaka, JapanChairman: Nobutada Saji
(Private)