Three great reasons to like First Pacific, and profit
If you’re interested in investing in some of the best and fast growing businesses in the Asian Cub markets, without doing much work, the following company, which is doing all the hard and profitable work, may interest you.
First Pacific
First Pacific Company Limited (SEHK:142, OTCPK:FPAF.Y) is an investment management and holding company. It engages in the consumer food products, telecommunications, infrastructure, and natural resources businesses in the fast growing Asian Cub markets of the Philippines, Indonesia, and Singapore; and the emerging markets of the Middle East, Africa, and internationally.
The company offers a range of telecommunications and digital services, including fiber optic backbone, and fixed line and mobile networks. It also manufactures and distributes a range of food products, including noodles, dairy products, snack foods, food seasonings, nutrition and special foods, beverages, wheat flour, and pasta; breeds seeds; cultivates palm oil, rubber, sugar cane, and other crops; and offers cooking oils, margarines, and shortenings.
In addition, the company explores for, mines, and produces gold, copper, and silver; and produces sugar and ethanol. Furthermore, it is involved in the operation of gas-fired power plants; provision of water distribution, sewerage, and sanitation services; and operation of toll roads, hospitals, and rail lines, as well as provision of logistics services.
First Pacific was founded in 1981 and is headquartered in Central, Hong Kong.
There are three great and simple reasons to like First Pacific, and profit from its businesses.
1. Past performance is strong.
Quality earnings: First Pacific’s net profit results are a fair reflection of its performance.
Growing profit margin: Its net profit margin (2.7%) is higher than the previous year (1.9%).
Accelerating growth: First Pacific’s earnings growth in the past year (84.5%) exceeds its 5-year average (0.5% per year).
Earnings vs. industry and market: Its earnings growth in the past year (84.5%) exceeded the Hong Kong market (10.1%).
2. Future growth is strong.
High earnings growth: First Pacific’s earnings are expected to grow significantly over the next three years (25.5% per year).
Earnings vs. market: Its earnings (25.5% per year) are forecast to grow faster than the Hong Kong market (16.7% per year).
3. The company is undervalued (inexpensive).
👉 The PE, or Price to Earnings Ratio, determines investor sentiment and perceived value for a business. It measures and compares values among mature and profitable companies. A PE lower than Fair PE and Peers indicates increased investor pessimism at the moment, resulting in an undervalued (inexpensive and attractive) business.
Price to Earnings vs. Fair PE Ratio: First Pacific is undervalued (inexpensive) based on its Price to Earnings Ratio (6.6x) compared to the estimated Fair Price to Earnings Ratio (17.4x).
Price to Earnings vs. Peers: Its PE (6.6x) is inexpensive compared to the peer average (13.4x).
👉 A business’ true, fair, or intrinsic value is an estimate today of how much cash it will make in the future. A discounted cash flow valuation model is used to determine its true value and whether the business is fairly valued, overvalued (expensive and unattractive), or undervalued (inexpensive and attractive). This is the only true way to value a business and is used by analysts from the world’s most reputable brokers, institutions, and research firms, and by the top investing minds over the ages.
Below fair value: First Pacific (HK$2.97) is trading below the estimate of its fair value (HK$29.43).
Significantly below fair value: It is trading below its fair value by more than 20%.
The best way to protect ourselves from economic and geopolitical uncertainty is to invest in high quality, cash generating businesses over the long term, that deliver real value to the economies they serve.
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This post is excerpted, edited, and sourced from analyst notes and S&P Global Market Intelligence. The content is for general informational and entertainment purposes only and should not be construed as investment advice.