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CENTURY PACIFIC FOOD, INC. ALPHA SECURITIES
Food, Beverage, and Tobacco Industry
Philippine Stock Exchange (PSE) This report is published for educational purposes only by
students competing in the CFA Institute Research Challenge.

Ticker: CNPF PM Current Price: Php Php 14.94 Recommendation: BUY

Valuation Date: 11/22/2019 Target Price: Php 21.00 40.59% upside

CNPF: The Growth of the Century

Superior brand recognition, continued product launches, and extensive
distribution network Market Overview
We issue a BUY recommendation on Century Pacific Food, Inc. (CNPF) with a Ticker CNPF.PM
target price of Php 21.00/sh, presenting a 40.59% upside potential on November Shares 3, 542.26
22, 2019 closing price of Php 14.94. The target price is derived using DCF. Outstanding
CNPF’s branded business continues to boast robust growth with a NI CAGR of in Php M
15.29% 2018A-2023F and an EPS CAGR of 15.38% despite a challenging Market Cap 52, 921.34
consumer market last year. Its brand equity, along with extensive distribution in Php M
network and sheer scale provides protection against new market entrants and Market Cap 1, 039.48
allows the company to implement its product strategies. The company launched in USD M
three new products in Argentina Corned Chicken, Birch Tree Fortified Chocolate Adj 52- 16.45
milk, and Coco Mama coconut cream, further enhancing its coconut product line. Week High
CNPF also relaunched 555 fried sardines to provide premium yet affordable Adj 52- 13.23
alternative in the sardine segment. Week Low
Ave Daily 27.30
Investment Summary Turnover
Free Float 23.78%
Maintained growth of revenues and profits %
CNPF’s top-line revenue for the past year has driven by branded products- Source: Bloomberg, Team Computations
marine, meat, and milk. Despite the country’s highest inflation and weakest
peso, Century Pacific still manages to maintain its revenues and profits by
implementing cost management and tactical promotions. With the company
celebrating its 40th year, CNPF still delivers respectable profits of PHP 2.8 M for
the year 2019E (Appendix E-1) and with a CAGR of 15.29% 2018A-2023F.
Continued expansion of GPM with lower input prices
Lower tuna prices, favorable FX, and subdued inflation are key drivers in the Price Performance
expansion of gross margin as it increased to 24.4% in 3Q19 from 22.9% in 3Q19
and 21.51% in 2018. Softer tuna prices seen as skipjack tuna prices fell to USD
900/ton in November this year, bringing average tuna price in the first nine
15
months to USD 1,224/ton, 21% lower than for the same period last year. This
allowed the company’s margins to expand even with the continued brand
building initiatives and more aggressive pricing as it launched new products.
Emerging milk segment as driver for growth
10
CNPF’s milk segment is emerging as its third largest business, behind core
2013 2015 2017 2019
canned marine and canned meat business, representing 23% of total sales in
Source: Bloomberg
3Q19, a +10% expansion from 13% of total sales (ave 2016-2018). CNPF is
positive of the long-term prospects of the segment, with the Philippine dairy
market remaining to be on the low per capita consumption relative to peers. It
is expected to grow alongside rising per capita incomes.
Highly-diverse products to varying consumer demands
One of the company's strengths in the industry in play, its flexible pricing models
maintain its affordability to not only a limited class of buyers but can meet
varying demands of different customers. It ensures that each brand are
specifically introduced and strategically marketed to its target base thus, fueling
revenue generation for the company built on consumer trust and products'
affordability. CNPF brags about its well-established track record in introducing
product lines that cater to different consumer needs by which they discover
through market research and methodologies.
2018A 2019E 2020F 2021F 2022F 2023F
Revenue 37, 885 41, 674 46, 675 51, 809 57, 249 62, 974
EPS (PHP/sh) 0.80 0.87 1.05 1.23 1.42 1.63
EPS Growth 11.07% 8.99% 20.69% 17.07% 15.10% 14.92%
(%)

ALPHA SECURITIES
ALPHA SECURITIES | CNPF
| CNPF PAGE11
PAGE
 Net Income 7.48% 7.38% 8.02% 8.48% 8.83% 9.20%
Margin (%)
ROE (%) 16.95% 16.12% 16.88% 17.13% 17.09% 17.02%
P/E (x) 19% 25.28% 20.95% 18.69% 16.90% 14.72%
Source: Company Data, Team Estimates

Business Description Company Portfolio

CNPF was founded in 1978 as a family business engaged in processing,
manufacturing and exporting tuna products. Eventually, the company emerged
into the country's leading tuna canneries, exporter of OEM tuna products, as
well as manufacturer of seafood and meat-based products. The company
continues to expand its product base as it also entered the production of dairy,
milk and mixes. Having maintained its reputation and large operating scale in
the industry, CNPF is the leading choice in the local food industry and consumer
goods as it also expands its global presence by going beyond the Asia Pacific
Source: Company Data
Region.
Leading player of diversified food industry products
With its wide array of products offered, CNPF sustains market leadership in
domestic food products industry. The company’s main five business segments
composed of Marine products, Meat products, Milk, Tuna OEM, and Coconut
OEM. Although a challenger in the milk and dairy category, the milk segment Distribution Network
continues to exceed its target profits and stabilize its contribution in the Total 138, 000
continued growth of the local dairy market. Meanwhile, the company's legacy
Philippine
business, its Tuna OEM or original equipment manufacturer segment ranks as Outlets
the country's top exporter which indicates that the company remains as the Served
international brands' top choice and trusted partner. A detailed revenue mix
Total 927, 000
table is presented below to determine the contribution of each segment to the Philippine
company’s growth: Outlet
Revenue Products
Segment Products CNPF Brands Available
Contribution
Marine tuna, sardines 32% (flagship brand) Equivalent 80%
and other fish Century Tuna, Point of Sales
and seafood- along with 555, in the
based products Blue Bay, Fresca, Philippines
Kamayan, Offshore Toll 14
Century Quality Manufacturers
and Lucky 7 for CNPF
Meat corned beef, 25% (flagship brand Products
meat loaf, for meat) Total 62
luncheon meat, Argentina, 555, Countried
Vienna sausage, Swift, Hunt's, Products
pork and beans Wow! Ulam, Available In
Source: Company Data
and other meat- Shanghai, and
based products Lucky 7
Milk full cream milk, 17% Birch Tree and
powdered milk the entire line of
drink, evaporated Angel milk
and condensed products
milk, all-purpose
cream and other
dairy products
Tuna OEM private label 17%
canned, pouched
and frozen tuna
products
Coconut OEM retail-packaged 9%
coconut water,
organic virgin
coconut oil,
desiccated
coconut, coconut
flour, coconut
milk and coconut
cream
Source: Company Data

ALPHA SECURITIES | CNPF PAGE 2

 Ownership Structure
Currently, CNPF is wholly owned by its parent company Century Pacific Group,
Inc. (CPGI), the Philippines' Po family and majority shareholders of PIZZA PM
and ALCO PM with 69% of the stocks. Meanwhile, the remaining 31% is owned
by the public. In total, there are 3, 542, 258, 595 issues and outstanding shares.
Ownership Structure
Industry Overview and Competitive Positioning
Growing economy continues to widen market distribution
With the economic GDP expanded at 6.2% YoY for the 3Q of 2019 due from
private consumption as its main growth driver, CNPF results to a wider market
and a promising demand on consumer goods. With the increasing total
consumption Per Capita of 47.12 % averaging from total family expenditures of
food and beverages coming for low to middle class, Philippines has the largest
shelf-stable food consumption in ASEAN. Determinately, CNPF is expecting a Source: Company Data
low-double digit increase in both top line and bottom line on its revenues.
Leveling-up demands of coconut products
CNPF takes advantage of the growing coconut products by launching its first
branded Coco product – Coco Mama Fresh Gata in late November 2019. As more
people turn to healthier lifestyle, CNPF could potentially provide an upside
potential on the growth of coconut products. Philippines with the highest
volumes and exporter of coconut worldwide in 2018 the company is accounted
as the leading coconut water exports in the Philippines approximately at 42%
as of 2018. Coconut production for the 3Q of 2019 slightly increased by 0.3%
from 14 Million metric tons (PSA.GOV, 2019). CNPF aims to take over the
abundant supply of coconuts.
Emerging milk segment Components of GDP
Poverty alleviation and low per capita consumption is still the main reason why Description Php M
dairy industry remains underpenetrated in the Philippines relative to its peers. Gross -26,360
However, the industry is slowly hiking its imports of dairy products estimating Capital
21% as of 2019. USDA Foreign Agriculture (FAS) reported that total imports of Formation,
2019 are predetermined a record favorable to global dairy prices especially for Changes in
non-fat and whole milk powder. There will be an accretion of imports marginally Inventories
on Dairy for 2020 due to higher consumption and increasing income as projected Final 272,139
by the USDA. With the expanding middle class, dairy industry is expanding its Consumption
market. National Dairy Authority’s ambition is to boost dairy and milk Expenditure,
production. CNPF’s branded milk is emerging as one of the main drivers of General
revenue contribution to overall business that outperforms other branded Government
products due to an increase in market share. GFCF 723,340
Porter’s Five Forces Analysis Final 1,569,559
Category Subcategory Assessment Consumption
Expenditure,
Large Size of Industry Significant Threat. Top players
Private
in the industry set the bars high Exports, 1,589,173
Rivalry among the Existing Competitors

in terms of quality processed Goods and

food and meat products Services
Exit Barriers Low Threat. Firms are more Imports, 1,787,113
likely to leave the market Goods and
Services
Increasing Industry Growth High Threat. Manufacturing Source: Company Data
industry contributes most to
the country’s economic growth,
(High)

while the food and beverage

sector is among the largest
contributors within the
manufacturing industry.
Brand Identity Significantly High. Trusted
names with better reputation
will always stand firm to serve
as the foundation of customer
preferences, especially in food
and beverages.
ALPHASECURITIES
ALPHA SECURITIES | CNPF
| CNPF PAGE33
PAGE
 Category Subcategory Assessment
Capital Requirement Low Threat. Need of new
machinery, land and plant are
Threats of New Entry

expensive in entering the

industry.
(Moderate)

Access to Raw Materials Moderate Threat. New entrants

can easily buy in an open
market otherwise they want to
control their prices.
Brand Loyalty Moderate Threat. Consumers
can be easily swayed with lower
prices of products.
Economic Scale Moderate Threat. The industry
associated in producing high-
volume products with a high
brand identity that caters to
different classes.
Product Diversity Significant Threat. Philippines
has plenty of variety of
processed and canned goods.
Substitute
Threat of

Products
(High)

Thus, price tolerance of

Product Innovations
Price Sensitivity
Importance of Quality
Bargaining Power of Buyer
consumers shall be considered.
Significant Threat. Branding
and marketing must vary and
apply new trends.
Significant Threat. Consumers
are presented with a wide
selection of products in the
same categories that CNPF
produces.
High Threat. Quality is of

utmost importance in the

industry especially on the
safety of food products.
Threat to Buyers to Produce High Threat. It is common
(High)

Input practice among retailers to

Low Switching Costs
Dependence of Industry
Bargaining
produce products similar to the
offerings of their supplier firms.
These ‘in-house brands’ can eat
up market share from firms.
High Threat. The industry as a
whole, faces low switching cost
as consumers can move from
one consumer goods brand.
High availability of substitutes
intensifies the bargaining
power of consumers.
High Threat. The industry

depends on key suppliers for

Suppliers
Power of

(High)

their raw materials and business

operations will be greatly
affected if these suppliers fail to
perform their obligations.
Source: Team Analysis

ALPHA SECURITIES | CNPF PAGE 4

 Corporate Growth Strategy and Key Directions
R&D innovations to healthier and more responsible lifestyle
Setting goals in a growing economy and with a consumer preference on much
healthier lifestyle, CNPF is expanding its R&D to introduce a healthier product
line and to market its new product developments (NPDs) – Argentina Corned
Chicken, Birch Tree Choco Fortified, and Coco Mama Fresh Gata, its first coconut
Annual Dairy
branded product. With a Php 2 million-worth of budgeted CapEx, CNPF managed
Consumption per Capita
to maintain a low-double digit rate relative to its revenue line. CNPF well-
(kg)
positioned its brand with an image of healthy products. CNPF, now on its 40th
year, adopted well to urbanization and successful trends by setting innovative 45 70000
marketing campaign. 40
60000
Extensive distribution network for market dominance 35
Philippines is the largest shelf-stable in the market having a total consumption 30 50000
25
of 670 amongst ASEAN – Indonesia, Thailand, Malaysia, Singapore and CNPF is 40000
20
the largest producer of shelf-stable products in the Philippines. With products
15 30000
worth 927, 000 points of sales locally, CNPF is also investing globally in
10
worldwide sales and distribution of infrastructure having CNPF products available 5
20000
in 62 countries. 0 10000
Value positioning to provide to different socioeconomic classes
CNPF presents different local segments that compete as local players in each
industry. Multiple branded products ensure that the company caters to a broad
customer base through different socioeconomic classes of the Filipino society.
From low, medium and premium branded products line, CNPF leads the market Source: Company Data
for marine, meat, milk, tuna and coconut OEM.

Valuation
We used a DCF valuation to come up with our target price of Php 21.00/sh with
a 40.59% upside compared to CNPF’s closing price on November 22, 2018 of
Php 14.94.
Revenues
To arrive at the forecasted revenues, we independently considered each of the
business segments - marine, meat, milk, tuna OEM, and coconut OEM and we
have arrived with an upside of 40.59% with a target price of Php 21.00/sh. We
have considered the launching of new products and expansion for future plans.
We used the low double-digit growth of 11% for revenues driven broadening of
market distribution. Each segment forecasted depends on how it performs
historically in its respective industries. With a wider market and strong brand
quality, CNPF positions itself to the top despite raw material fluctuations that
happened in the past. GPM ratio improved by 0.53% annually in 2019 and
forecasted to increase to 22.57% by 2020.
Weighted Average Cost of Capital
Using the Philippine Stock Exchange index (PSEi), we have arrived with 0.5126
calculated beta (Appendix C), market assumptions risk free rate of 4.50%, and
market risk premium of 8.0% used in computing cost of equity of 8.60%. Using
the capital asset pricing model, debt-to-MV ratio of 0.41, we obtained a WACC
of 7.87%.
Terminal Value
The terminal growth rate used is 3.5% which was based on free cash flow
computed (see Appendix C).
Relative Valuation
We compared CNPF to its domestic peers by considering its different
subsidiaries. We believe that these local peers are fit to play for CNPF’s branded
segments. We compared its Market Capitalization, Enterprise value, P/E Ratio,
PB Ratio, and P/CF ratio. For more detained computation see Appendix C.
WACC Assumptions
Assumptions Rate Methodology
Risk Free Rate 4.50% Philippine government
bond with a forward

ALPHA SECURITIES | CNPF PAGE 5

 Assumptions Rate Methodology
yield of 10 years
Market Risk Premium 8.0% Expected return
Beta 0.5126 PSEi vs CNPF
Cost of Equity 8.60% Used to calculate CAPM
Pre-tax Cost of Debt 7.50% Future borrowings
After-Tax Cost of Debt 5.25% Future borrowings after
tax
Effective Tax Rate 30% Statutory corporate tax
Debt of MV Ratio .41 Used to calculate WACC
WACC 7.22% CNPF’s cost of capital
Sensitivity Analysis on Valuation Assumption
We have identified that there are constraints that are important to consider in
the valuation model. One of the most important factors that is identified by the
team is the changes in raw material prices. This changes the finance costs which
gave points on making a shift on the recommendation especially that the raw
material prices consist of the largest portion in cost and expense. The fluctuation
of prices most likely shift points on the potential upside recommendation of
40.59%.

Financial Analysis
We used a DCF valuation to come up with our target price of Php 21.00/sh with
a 40.59% upside compared to CNPF’s closing price on November 22, 2018 of
Php 14.94.
Key Financial Ratios
2015 2016 2017 2018 2019E 2020F 2021F 2022F 2023F
Dupont Analysis
Gross Margin (%) 26.57 26.56 21.07 21.51 22.04 22.57 23.1 23.63 24.16
Operating Margin (%) 11.71 13.48 10.42 10.03 10.6 11.47 12.09 12.57 13.09
Interest Burden (%) 99.96 97.86 96.88 94.82 92.78 93.27 93.49 93.63 93.7
Tax Burden (%) 70.82 75.11 76.81 78.68 75 75 75 75 75
Net Margin (%) 8.29 9.91 7.75 7.48 7.38 8.02 8.48 8.83 9.2
Asset Turnover (x) 0.12 1.34 1.41 1.25 1.29 1.27 1.24 1.21 1.17
Return on Assets (%) 11.52 13.32 10.92 9.34 9.54 10.2 10.51 10.71 10.8
Financial Leverage (x) 1.41 1.36 1.34 1.34 1.44 1.43 1.43 1.42 1.42
Return on Equity (%) 18.69 21.18 17.62 16.95 16.12 16.88 17.13 17.09 17.02
Liquidity Indicators
Current Ratio (x) 1.68 2.26 2.06 2.03 2.16 2.31 2.46 2.66 2.83
Quick Ratio (x) 0.69 0.82 0.96 0.85 0.71 1.05 1.2 1.38 1.55
Leverage Indicators
Debt/Equity (x) 0.62 0.59 0.61 0.81 0.69 0.65 0.63 0.6 0.58
Net Debt/Equity (x) 0.52 0.51 0.5 0.7 0.65 0.45 0.37 0.28 0.19
Operating Efficiency Indicators
Inventory Turnover (x) 2.89 2.93 3.58 3.19 2.56 2.7 2.94 2.94 2.94
Operating Cycle (Days) 182.5 176.19 153.54 174.22 202.02 189.47 178.29 178.52 178.68
Cash Conversion Cycle
100.16 106.19 84.95 100.34 122.84 114.19 103.85 105.48 106.94
(Days)
Shareholder Indicators
EPS (Php/sh) 0.87 0.5 0.72 0.8 0.87 1.05 1.23 1.42 1.63
EPS growth (%) 14.47 -42.52 44.08 11.07 8.99 20.69 17.07 15.1 14.92
Source: Company Data, Team Estimates

Maintains strong momentum on net income

We expect CNPF to attain a positive growth level on its total revenue and
increase our estimate to 10.62% (2018A-2023F CAGR), powered mainly by its
branded products (Appendix A). Forecasted financials on milk branded products
are expected to maintain its continues outbreak together with CNPF’s flagship
marine and meat products that are likewise expected to contribute more to
revenues to be helped by the Argentina Corned Chicken new product launch.
Tuna prices start to drop to only USD 1000/ton that gave a favorable impact on
its branded marine products. The growth of the economy in 2020 has the

ALPHA SECURITIES | CNPF PAGE 6

 risks to tilt downward but CNPF’s brand quality and sustained brand-building
CNPF has already doubled its top line for the past years and expected to grow
for the coming year at the forecasted revenue CAGR of 10.61% (CAGR 2018-
2023E). Without a drastic increase in finance costs and GPM improvement due
to tuna price drop, we are confident in the high revenue forecast, which
concludes a 14.74% (CAGR 2018-2023E) on its forecasted net income. Revenue Distribution
Higher CAPEX for continuous support and development
Early 2019, CNPF introduced three of its new branded products which include
Argentina Corned Chicken, Choco Flavored Birch Tree Fortified, and Coco Mama
Fresh Gata. Towards offering diversified products, the continuous double-digit
growth for the past years enabled CNPF to invest more on Capital Expenditures
(CapEx) worth PHP 2B in 2020 to advance in expansion of tuna plantation,
replacement, maintenance and effectivity of CapEx which will serve its
Source: Company Data
continuous development and support plans in core business. Also, the OEM
segment of the company expands in Russia in 2020. CNPF is optimistically
confident in generating a positive return on investment in the coming years.

Healthy balance sheet generates support in expansion

An increase in interest expense due to the adoption of IFRS 16 accounting
standard affected interest expense and depreciation. Interest expense continues
to balloon over the year. The net debt EBITDA is 1.1x and short-term debts shall
be paid within the year or the business can still refinance when interest expense
is low. It may seem worrisome but CNPF still maintains its healthy balance sheet
position with a net gearing ratio of 0.3x that still makes it well-positioned in
expanding the business.

Investment Risks
Market Risk | Interest Risk Investment Risk Matrix
CNPF is at its comfortable gearing ratios. We believe that CNPF’s gearing ratios
(Net gearing ratios 0.3x) that there is a low possibility of the exposure of interest
rate risk. CNPF is still capable in borrowing cost while maintaining its debt to
equity ratio of 3:1.
Market Risk | Equity Risk
CNPF is ensuring a good gearing ratios and actively engaging to its shareholders
by hosting a regular meetings of related party transactions (RPT) and disclosing
every engagement to its shareholders.
Market Risk | Raw Materials Prices
The observed fluctuation on raw materials prices make CNPF exposed on Source: Team Analysis
volatility of the effects of the price changes for the company that can lead to
lower profitability metrics. Even due to formidable effects on price effects, CNPF
has a gear on study and monitoring raw materials prices and trends. Thus, CNPF
still support the double digit increase and still achieved bottom line profit.
Market Risk | Foreign Exchange Rate Risk
CNPF is engaged in the export business primarily from OEM and coconut
products. To mitigate the risk of fluctuation of foreign exchange risk, CNPF is
hedging its raw materials.
Operational Risk | Financial Risk
With the volatility of market interest rates, CNPF might experience financial risk
due to different macroeconomic factors which indicates the bullish and bearish
of the market. CNPF maintains a good Liquidity ratios as the company targeted
to sustain at least 1.0:1. Price adjustments from raw materials affects the
financial risk of CNPF.
Operational Risk | Environmental Risk
CNPF is engaged in sustainable practices by increasing its environmental
awareness. CNPF makes sure that it monitors the use of its natural resources
and the environmental impact to the operations. Risks of contamination and
safety purposes affects CNPF, thus it will weaken its branding and reputation.

ALPHA SECURITIES | CNPF PAGE 7

 However,CNPF has a good quality control system and recognize food safety and
contamination prevention.
Operational Risk | Corporate Governance
CNPF is in the management of Po Family. Conflicts may arise between the
members of the family but to avoid potential conflict of interest, the corporate
governance committee shall ensure that CNPF complies with proper principles,
practices, and related party transactions and ensure that all materials are
reviewed and supervised. CNPF has a good repute on its corporate governance
through building greater value for the company and all of its shareholders.
Industry Risk | New and Existing Competitors
CNPF is focused on research and developing its domestic branded products
taste-wise and nutrition wise and in product satisfaction in the overall experience
of consumers Philippine Market. Given that CNPF has different business pillars
its easier for CNPF to negotiate with its suppliers giving them a step ahead on
cost advantage to potential new players. CNPF as the pioneer of local tuna
market, it has established its strengths in distribution in the market.
Political Risk | New Tax Laws
With Tax Reform for Attracting Better and Higher Quality Opportunities
(TRABAHO) bill being passed. CNPF’s production and exports might be affected
especially for its OEM products. CNPF expects (1) lower corporate income taxes
and (2) removal and rationalization of incentives and perks.

Corporate Governance
CNPF maintains its Corporate Governance on the basis of ensuring that it meets
its duties and responsibilities to the stockholders and other stakeholders which
include, among others, customers, employees, suppliers, financiers,
government and to its community in which it operates. The company’s
performance, set of rules and framework is governed by said compliance of the
Board of Members and the Management to said guidance. A detailed evaluation
of CNPF’s corporate governance can be found in Appendix D.
Selection of independent directors in seeking board decisions
Currently, CNPF has duly appointed four independent directors (ID) to assist the
company in providing sustainable solutions under its helm. Coming from a
previously family-owned business, this action delivers fair choices on behalf of
the company. Its lead ID is Fernan Victor Lukban and he is joined by Johnip Cua,
Frances Yu, and Eileen Grace Araneta all of which are non-executives and have
supported their competency and knowledge in the industry and business. The
positions for CEO and Chairman of the Board remains separate which entails a
further elaborate opportunity to discuss and raise concerns for CNPF. The former
is held by Teodoro Alexander Po, elected in July 2018 while the latter is still held
by Christopher Po, re-elected in July 2018.
Designating committees to oversee company’s exposure to risk
With its four established committees, CNPF takes serious arrangements in terms
of monitoring and analyzing the impact of its decisions. Together with its Audit
Committee, Corporate Governance Committee, Board Risk Oversight Committee
(BROC) and Related Party Transaction Committee (RTP), all its plans and
activities are rigorously checked and counterchecked in order to minimize the
risk. Consultants, auditors and risk managers are hired and tasked to determine
the objectivity of the transactions cognizant of regulatory requirements.
Decisions are made with high regard to the company’s welfare and in the best
interest of its shareholders who are bestowed with privileges of voting, appraisal
and other significant rights.
Corporate Social Responsibility
CNPF cited 12 of its social responsibility activities that continue to cater to locals,
especially the less privileged. These programs include direct purchases from
partner fisherfolk and fishing companies where they can have the opportunity
to sell their products at fair market price. Relative to its “LinkSFarM” Project,
which stands for Linking Smaller Farmers to the Market, CNPF provides access

ALPHA SECURITIES | CNPF PAGE 8

 for small and barangay-based businesses access to fair and consistent buyers
of vegetables and products. CNPF also founded the Century Pacific Group -
Ricardo S. Po (CPG-RSPo) Foundation, an affiliate company, to serve as their
socio-civic arm in addressing social issues such as hunger and malnutrition. They
launched the “KAIN Po” program in 2010 and has spearheaded feeding programs
across the country.

ALPHA SECURITIES | CNPF PAGE 9

Appendix A: Company Description
Appendix A-1: Statement of Comprehensive Income
Century Pacific Food, Inc. (CNPF) is a wholly owned subsidiary of Century Pacific Group, Inc. formerly
known as Century Canning Corporation. CNPF performs under the Food, Beverage and Tobacco Industry
alongside San Miguel Food and Beverage, RFM Corporation and Universal Robina Corporation.
The company is primarily engaged in business segments such as selling, buying, processing, canning,
packaging and manufacturing of fish and meat products. For their fish segment, they are affiliated in
providing products like tuna, sardines and other fish and seafood-based products. Their canned meat
segment produces corned beef, meat loaf, luncheon meat and other meat products.
CNPF is also involved in the production of dairy and mixes segment which constitutes their canned milk,
powdered milk, and other dairy products as well as coffee mixes and flavor mixes.
The aforementioned business also derives its revenues from tuna exports by which they produce private
label canned, pouched and frozen tuna products and coconut segments which also produces retail-
packaged coconut water, organic virgin coconut oil, desiccated coconut, coconut flour and coconut milk.
dairy products as well as coffee mixes and flavor mixes.
Among the recognizable brands under the company include "Century Tuna", "555", "Blue Bay", "Fresca",
"Lucky Seven", "Argentina", "Swift", "Shanghai", "Wow", "Angel", "Birch Tree", "Kaffe de Oro", and
"Home Pride".
CNPF's wholly-owned subsidiaries are GTC; SMDC; Allforward Warehousing, Inc.; Century Pacific
Agricultural Ventures, Inc.; Century Pacific Seacrest, Inc.; Century Pacific Food Packaging Ventures, Inc.;
Centennial Global Corporation; Cindena Resources Limited; Century (Shanghai) Trading Company
Limited; Century International (China) Company Limited; and Century Pacific North America Enterprise,
Inc.
Appendix A-2: Segment Description
Marine - Being the top revenue generating segment of the company, Marine serves as the strongest
line of products for CNPF. CNPF produces tuna, sardines and other fish and seafood-based products
including its flagship brand, Century Tuna, along with 555, Blue Bay, Fresca, Kamayan, Century Quality
and Lucky 7. It serves as a category leader and driver in this segment as it holds market-leader
position in canned tuna, especially for their Century Tuna which is a champion for health and wellness
in the local setting.
Meat - The company also manufactures corned beef, meat loaf, luncheon meat, Vienna sausage, pork
and beans and other meat-based products like Argentina, 555, Swift, Hunt's, Wow! Ulam, Shanghai,
and Lucky 7. It boasts its market leadership stand in the local market for its flagship corned beef
brand, Argentina.
Milk - Although a challenger in the milk and dairy category, the milk segment continues to exceed its
target profits and stabilize its contribution in the continued growth of the local dairy market. CNPF's
branded milk produces full cream milk, powdered milk drink, evaporated and condensed milk, all-
purpose cream and other dairy products which consist of Birch Tree and the entire line of Angel milk
products.
Tuna OEM - As the company's legacy business since 40 years ago, its TUNA OEM or original equipment
manufacturer segment ranks as the country's top exporter which indicates that the company remains
as the international brands' top choice and trusted partner. This segment manufactures private label
canned, pouched and frozen tuna products.
Coconut OEM - Taking advantage of the abundant resources for coconuts in the country and to sustain
the global demand for organic and healthy products, the company, through its Coconut OEM Segment
produces retail-packaged coconut water, organic virgin coconut oil, desiccated coconut, coconut flour,
coconut milk and coconut cream.
Appendix A-3: Product Portfolio
Segment Value for Money Mass Market Premium Market
Canned and Processed Lucky 7, Fresca Tuna 555, Blue Bay Tuna, Century Tuna, Century
Fish Kamayan Quality
Canned and Processed Lucky , WOW 555, Shanghai, Hunts, Swift
Meat Luncheon Meat,
Argentina
 Canned and Drinking Home Pride, Kaffe de Angel, Birch Tree Birch Tree Full Cream
Milk Oro Fortified Milk Powder
Source: Company Data

Appendix A-4: Breakdown of Subsidiaries

Name of Subsidiary Ownership Interest Description
General Tuna Corporation (GTC) 100% GTC is engaged in
manufacturing and exporting
private label canned tuna,
pouched and frozen tuna
products to different
companies.
Snow Mountain Dairy 100% SMDC engaged its business in
Corporation (SMDC) producing, canning, packing,
buying and selling retail and
wholesale food products that
includes all kinds of dairy
products, milk and juices.
Allforward Warehousing Inc. 100% AWI is engaged in the business
(AWI) of operating warehouse facilities
and storage operations.
Century Pacific Agricultural 100% CPAVI manufactures high value
Ventures, Inc (CPAVI) organic-certified coconut
products for both export and
domestic market.
Century Pacific Seacrest Inc 100% CPSI is engaged in developing,
(CPSI) maintaining, licencing and
administrating markets and all
kinds of intellectual properties.
Centennial Global Corporation 100% CGC was incorporated in British
(CGC) Virgin Island that is engaged in
trademark holding.
Century Pacific Food Packing 100% CPFPVI engaged in packaging
Ventures, Inc. (CPFPVI) materials and tin cans.
Cindena Resources Limited 100% CRL is a trademark holding
(CRL) company
Century Pacific North America 100% CPNA is incorporated in United
Enterprise (CPNA) States engaged in any lawful
act or activity the company may
be organized under the General
Corporation of California.
Source: Company Data

Appendix A-5: Accreditations and Awards

Year Grantor/Awarding Body Award/Recognition
2011 Reader’s Digest Century Tuna and Argentina
Trusted Brand
2011 Agora Awards Marketing Company of the Year
2012 Reader’s Digest Century Tuna and Argentina
Trusted Brand
2013 Reader’s Digest Century Tuna and Argentina
Trusted Brand
2014 Asset Publishing and Research Initial Public Offering (Best Deal
Ltd in the Philippines)
2014 Agora Awards Gregory Banzon
Marketing Excellence

2015 Reader’s Digest Century Tuna and Argentina

Trusted Brand
2016 Reader’s Digest Century Tuna and Argentina
Trusted Brand
2017 Finance Asia Philippines’ Best
 Mid Cap Company
2017 CEO Excel Awards Gregory Banzon
Communication Excellence
2017 FTSE Small Cap & All Cap
Indices Asia Pacific
2018 Finance Asia Philippines’ Best
Mid Cap Company
Philippines’ Third Best
at Investor Relations
2018 IR Magazine Awards Best in Sector Consumer
South East Asia Staples Finalist
Certificate for Excellence
in Investor Relations
2018 Agora Awards Outstanding
Achievement
in Export Marketing
2018 ASEAN Business Awards Family Business Award
Country Winner &
ASEAN Winner
2018 Financial Times 1000 High-Growth Companies
Asia Pacific
2019 1000 High-Growth Companies Asian Export Awardee
Asia Pacific Processed Food Large
Corporate Category

2019 Corporate Governance Asia Asia’s Best CEO (Investor

Relations), Philippines’ Best
Investor Relations Company
and Professional
Source: Company Data

Appendix B: Industry and Competitive Positioning

Appendix B-1: Porter’s Five Forces Analysis
1. Rivalry among the Existing Competitors: High
Large size of the industry: Significant Threat
With multiple firms in the industry, quality remains as the primary factor that will affect consumer
preferences hence, making the competition stingy. Consumer goods are also highly volatile as it is
dependent on price, quality, and customers’ tastes.
Top players in the industry have set the bars high in terms of quality processed food and meat products
dominating the food and beverage industry. To retain their competitive advantage as against their co-
players and potential participants, they have to continuously innovate and provide high quality products.
Sustainability and quality are key factors for the players to endure tight competition. With more options
for the consumers, their sales would be highly subjected to the quality provided by the players.
Exit barriers: Low Threat
When exit barriers are low, weak firms are more likely to leave the market, which will increase the profits
for the remaining firms. Low exit barriers are a positive for Meat Processing. With CNPF being rated as
one of the most competitive players of the industry with equipment and properties primarily related to
the main course of their businesses and products, the company has properly insinuated its position in
the industry. This is actually an advantage for CNPF against other players with lesser capital and to new
entrants who wishes to join the industry.
Increasing industry growth rate: High
The manufacturing industry in the Philippines is the top contributor to the country's economic growth,
while the food and beverage (F&B) sector is among the largest contributors within the manufacturing
industry. The F&B sector accounted for 10% of GDP and for 51.2% of the nominal gross value added
(GVA) of the Philippine manufacturing industry in 2017, according to official data from the Philippine
Statistics Authority (PSA). The performance of the F&B sector is shaped by food manufacturing, with
beverage production accounting for just 4.2% of the total value added of manufacturing. With this data,
the competitors would strive to get the bigger deal out of the consumers.
Brand identity: Significantly High
Throughout the stern competition between participants in the industry, their focal point of advantage
depends on their brand and quality. Trusted names with better reputation will always stand firm to serve
as the foundation of customer preferences, especially in terms of food and beverages. Customers would
always prefer high quality and duly approved and regulated products in this sector. Branding affects
what people see in the products offered. It is a strong factor due to a thinking that if the brand of a
product is well-known, it is of greater quality.
2. Threats of New Entry: Moderate
Capital Requirements: Low Threat
In entering the industry there is a high capital expenditure that are need to consider this includes:
machinery, equipment, land and plants. Access of distribution market is also vital especially because of
high investment in Research and Development is needed for innovations and improvements. Therefore,
barrier of entry is high.
Economies Scale: Moderate Threat
The industry associated in producing high-volume products with a high brand identity that caters
to different classes.
Access of Raw Materials: Moderate Threat
Food and beverage industry has a wide array of suppliers. New entrants can easily buy in an open market
otherwise they want to control their prices. And to preserve the product quality, strong relationship with
the supplier should be established.
Brand Loyalty: Moderate Threat
Consumers can be easily swayed with lower prices of products. But some are loyal to a particular brand.

3. Threat of Substitute Products: High

Product diversity: Significant threat
The food manufacturing industry is constantly booming in the Philippines. As a general trend, the
Philippines’ young and fast-growing consumer base is gradually becoming more health-conscious and
are increasingly willing to try out new products. (ASEAN Briefing, 2018) Philippines has plenty of variety
of processed and canned goods. However, price tolerance of consumers shall be considered. This product
diversity is a significant threat to the industry in which become more competitive, a company must focus
and prioritize its target market.
Product innovations: Significant threat
Food manufacturers must continue to innovate their products to compete in the industry. Considering
the variety in the food industry, branding and identity must also vary and apply new trends. For instance,
people nowadays are becoming more health-conscious and willing to try new products.
4. Bargaining Power of Buyers: High
Buyers are price sensitive: Significant
Consumers are presented with a wide selection of products in the same categories that CNPF produces.
Consumer goods industry, specifically in food and beverage, are price sensitive. CNPF has a little bit of
advantage because of the perceived premium from their products in their branded business. Direct
consumers do not have a heavy pressure to influence price but retailers usually possess high bargaining
power.
Importance of quality to buyers: High
Quality is of utmost importance in the industry. Mere discussions in the form of allegations and actual
contamination or concern for the safety of food products from CNPF and similar firms could harm the
reputation of CNPF and the industry.
Threat of buyers to produce their own inputs: High
It is common practice among retailers to produce products similar to the offerings of their supplier firms.
These ‘in-house brands’ can eat up market share from firms like CNPF in their offerings. This also provides
greater bargaining power for the retailers.
Low switching cost: High
CNPF, and the industry as a whole, faces low switching cost as consumers can move from one consumer
goods brand. High availability of substitutes intensifies the bargaining power of consumers although
slightly limited by the branding of its canned food business, branded as such to be a healthy option,
which is limited in the specific categories where the company has offerings.
5. Bargaining Power of Suppliers: High
Dependence of the industry: High
The industry depends on key suppliers for their raw materials and business operations will be
greatly affected if these suppliers fail to perform their obligations.
Appendix B-2: SWOT Analysis
STRENGTHS WEAKNESSES
 Premium and health oriented branding of  Limited global presence
most canned products  169% Higher Financing costs
 Influential Marketing Strategies  Increasing freight and logistics costs
 Extensive product portfolio that caters to
a diverse market
 Good Working Capital Investments
(Inflows of P179M for Operating Activities
compared to last year – outflow of
P332,188,767)
 Continuous launching of new products and
improvements (Century Corned Chicken
and new flavor for Birch Tree)
 Double digit revenue growth
 Rapid growth in their revenue driven by
their multi-brand and multi-product in
their various segments which caters
larger scale of consumers
 Subsidiaries as their source of funds
OPPORTUNITIES THREATS
● Healthy and sustainable branding as ● Contamination, safety concerns,
growing trend deterioration of quality in the products of
● Higher GDP constitutes better and similar firms could give rise to
promising demand for consumer goods. reputational harm
● Innovative marketing campaigns and ● Threat of New Entry (International
strategies with health as the main theme Seafood Company, Alliance Select Foods
● Rising demand on dairy products and International Inc. has sold its US unit and
foods its asset to Indonesia to refocus on its
● Worldwide market Canned Tuna is operations in the Philippines and New
expected to grow Zealand)
● Increasing demand on ready-to eat food ● Volatile raw material prices
products ● Changing consumer preference
● The Philippines has been granted access ● The prohibition to the Philippines to fish in
to fish in the High Seas Pocket 1 (HSP1) Indonesia which affects the home base of
the Tuna industry – General Santos City
Source: Team Analysis

Appendix C: Valuation
Appendix C-1: Free Cash Flow Computation
2019 2020 2021 2022 2023
Net income 2,815,244,811 3,408,926,643 4,108,789,958 4,727,283,340 5,583,640,536
Add: 576,614,276 724,155,390 830,333,705 919,842,321 967,221,337
depreciation
Add: interest 305,993,663 338,324,392 380,692,362 432,496,693 489,710,625
expense (1-
tr)
Less: CapEx - - - - -
2,000,000,000 1,800,000,000 2,000,000,000 2,200,000,000 2,400,000,000
 Less: Change - -861,126,016 - - -
in WC 1,519,076,105 1,298,476,063 1,750,718,519 1,539,388,375
Total FCF 178,776,646 3,532,532,441 2,021,339,962 2,128,903,834 3,101,184,123
Appendix C-2: Multiples
CNPF URC RFM FB
Outstanding Shares 3,542,258,595 2204161868 3457157758 5909220090
Stock Price 14.94 149.5 5.46 89.95
Market Capitalization 52,921,343,409.30 329,522,199,266.00 18,876,081,358.68 531,534,347,095.50

Market Capitalization 52,921,343,409.30 3.29522E+11 18876081359 5.31534E+11

Total Debt 13,612,730,649.00 33918508988 440000000 35708000000
Cash and Cash 1,676,474,926.00 13023101912 2356895000 39425000000
Equivalents
Enterprise Value 64,857,599,132.30 350,417,606,342.00 16,959,186,358.68 527,817,347,095.50

Enterprise Value 64,857,599,132.30 350,417,606,342.00 16,959,186,358.68 527,817,347,095.50

Gross Sales 37,885,300,679.00 1.2777E+11 14710132000 2.86378E+11
Enterprise Value/Sales 1.71 2.74 1.15 1.84

Enterprise Value 64,857,599,132.30 350,417,606,342.00 16,959,186,358.68 527,817,347,095.50

EBITDA 3,798,999,996.00 13380612790 1459147000 45950000000
Enterprise Value/EBITDA 17.07 26.19 11.62 11.49

Stock Price 14.94 149.5 5.46 89.95

EPS 0.80 4.18 0.32 2.94
P/E Ratio 18.67 35.77 17.06 30.60

Stock Price 14.94 149.5 5.46 89.95

Book Value 4.72 39.1067 3.3776 12.28
P/B Ratio 3.16 3.82 1.62 7.32

Stock Price 14.94 149.5 5.46 89.95

Operating Cash Flow 304,425,159.00 18384116593 2833710000 52537000000
Outstanding Shares 3,542,258,595 2204161868 3457157758 5909220090
OCF/share 0.09 8.34 0.82 8.89
P/CF Ratio 173.84 17.92 6.66 10.12

Appendix D: Corporate Governance

Appendix D-1: Board of Directors
Name Position Information
Ricardo Po, Sr. Founder & Chairman ● founded CNPF in 1978
Emeritus
Christopher Po Executive Chairman ● Re-elected in July 2018
● Chairman of Shakey’s Pizza Asia
Ventures, Inc.
● Director of Arthaland Corporation
● President of the Century Pacific
Group-Ricardo S. Po Foundation, the
socio-civic arm of CNPF
● Member of the Board of Trustees of
World Wide Fund for Nature
Philippines
● Became the Managing Director of
Guggenheim Partners, Management
Consultant of McKinsey and
 Company, and Head of Corporate
Planning for JG Summit Holdings
● Holds a Master degree in Business
Administration from the Harvard
University Graduate School of
Business
● Graduated summa cum laude from
the Wharton School and College of
Engineering of the University of
Pennsylvania with dual degrees in
Economics and Applied Science
Teodoro Alexander Po Vice Chairman, President, ● Elected in July 2018
& CEO ● Vice President of Shakey’s Pizza Asia
Ventures, Inc.
● Held various positions in CNPF since
1990
● Completed the Executive Education
Program at Harvard Business School
● Graduated summa cum laude from
Boston University with a Bachelor of
Science degree in Manufacturing
Engineering
Ricardo Gabriel Po Vice Chairman ● Re-elected in July 2018
● Vice Chairman of Shakey’s Pizza Asia
Ventures, Inc.
● Vice Chairman of Arthaland
Corporation
● Held various positions in CNPF such
as Executive Vice President and COO
from 1990 to 2006 and Vice
Chairman of its Board of Directors in
2006
● Completed the Executive Education
Program at Harvard Business School
● Graduated magna cum laude from
Boston University with a Bachelor of
Science degree in Business
Management
Leonardo Arthur Po Director & Treasurer ● Re-elected in July 2018
● Director & Treasurer of Shakey’s
Pizza Asia Ventures, Inc.
● Director, Executive Vice President,
and Treasurer of Arthaland
Corporation
● Graduated magna cum laude from
Boston University with a degree in
Business Management
Fernan Victor Lukban Lead Independent ● Re-elected in July 2018
Director ● Lead Independent Director of
Shakey’s Pizza Asia Ventures, Inc.
● Director of Central Azucarera de
Tarlac, Inc.
● Became an Independent Director of
Arthaland Corporation from 2011 to
2016
● Founding fellow of the Institute of
Corporate Directors
● Consultant, Mentor, and Guest
Lecturer in the University of Asia &
the Pacific
● Holds a Master degree in Business
Administration from IESE Barcelona,
 Spain and Master of Science degree
in Industrial Economics from the
University of Asia & the Pacific
● Graduated from De La Salle
University with a degree in
Engineering
Johnip Cua Independent Director ● Re-elected in July 2018
● Chairman of Xavier School, Inc.
● Chairman & President of Taibrews
Corporation
● Director of various corporations such
as BDO Private Bank, PAL Holdings,
Inc., MacroAsia Corporation, and STI
Education Systems Holdings, Inc.
● Became the President & General
Manager of Procter & Gamble
Philippines from 1995 to 2006
● Graduated from the University of the
Philippines with a Bachelor of
Science degree in Chemical
Engineering
Frances Yu Independent Director ● Elected in March 2019
● Independent Director of Shakey’s
Pizza Asia Ventures, Inc.
● Chief Retail Strategist of Mansmith
and Fielders, Inc.
● Founder and President of FJY
Consulting, Inc.
● Became the Vice President and
Business Unit Head of Rustan’s
Supermarket and the Vice President
and Head of Marketing Operations for
Rustan’s Supercenters
● Served as the Chairperson for the
National Retail Conference and Stores
Asia Expo Programs Committee of the
Philippine Retailers Association from
2003 to 2005
● Graduated summa cum laude from
Fordham University, New York with a
Bachelor of Arts degree in English
Literature
Eileen Grace Araneta Independent Director ● Elected in March 2019
● Independent Director of Shakey’s
Pizza Asia Ventures, Inc.
● Serves as a consultant for brand and
communications strategy to both
multinational and local clients
● Held senior positions in Unilever
Philippines and J. Waiter Thompson
● Graduated magna cum laude from the
University of the Philippines with a
Bachelor of Science degree in
Business Economics
Appendix D-2: Senior Management
 Name Position Name Position
Gregory Francis Executive Vice Honelet Sayas AVP - Corporate
Banzon President and Chief Quality Assurance and
Operations Officer Technical Services
Oscar Pobre Chief Finance Officer, Carina Lising AVP - Food Service
Chief Information
Officer, and Chief Risk
Officer
Edwin Raymond Senior Vice President Francis Rodriguez AVP - General Trade
Africa and General Manager -
Meat and Corporate
Business Services
Teddy Kho Vice President and Ralph Umali AVP - Modern Trade
General Manager -
Tuna OEM
Cezar Cruz, Jr. Vice President and Joseph Edwin AVP - Trade Marketing
General Manager - Quimpo
Canned and Processed
Fish, Sardines
Wilhelmino Vice President - Gerald Manalansan AVP - Logistics
Nicolasora, Jr. Domestic Sales
Ronald Agoncillo Vice President and Alvin Manuel AVP - Labor and
General Manager - Milk Employee Relations
Emerson Villarante Vice President - Human Mary Jennifer Tan AVP - Corporate
Resources and Procurement
Corporate Affairs
Noel Tempongko Vice President and Maria Demetria Siasoco AVP - Canned Meat
General Manager - Marketing
Coconut OEM
Paul Hernandez AVP - Information Daisy Engle AVP - Corporate
Technology Research and
Development
Janina Mara AVP - Export Business Bryan Lingan Marketing Director -
Mendoza Emerging Business
Nelia Pura AVP - Finance Raymundo Ver Marketing Director -
Guinoo Milk
Giovanna Vera AVP - Investors Robert Crisencio Director - Fish
Relations and Treasury Manansala Procurement
Dionisio Balagso AVP - Corporate Manuel Gonzales Corporate Secretary
Controllership
Richard Kristoffer AVP - Corporate
Manapat Planning and Demand
Planning

Appendix D-3: Corporate Social Responsibility and Sustainability Practices

Project Purpose Partners Beneficiaries
Sustainable Fishing To conserve marine life Project of CNPF Company’s partner
and Giving Back to and to provide a ready fishermen and fishing
our Partners market for local companies
fisherfolk have been the
core of CNPF’s business
 model since its
establishment in 1978
as a pioneering tuna
canning facility in the
Philippines. CNPF is
committed to buying his
and other fishermen’s
produce at a fair market
price.
“KAIN Po” program To provide feeding Department of Resident children of
programs to the poorest Education Taguig- partnered committees
districts and provinces Pateros. and organizers
in the country with the
goal of improving the
health of the resident
children and
consequently, increase
their enthusiasm in
attending schools.
Employees’ Children CNPF gives back to its Project of CNPF Children of select
Scholarship Program employees by employees who are
rewarding scholarship currently attending
grants to selected school and met the
children who company’s
academically excel in qualifications
either grade school,
high school, or college,
and are in need of
financial assistance.
Filipina Movers and With its commitment to Together with Go Participants of the
Shakers promote gender Negosyo and in Tenth Filipina
diversity in the partnership with the Entrepreneurship
workplace, the event ASEAN Business Summit
emphasized on the Advisory Council
celebration of women Philippines — the 10th
and their capacity to be Filipina
agents of economic Entrepreneurship
change and progress. Summit.
Giving Back to the The project serves as Project of CNPF Customers, employees,
Environment the company’s initial community and the
step towards the use of planet.
renewable energy and
solar power as it is now
the primary source of
its cold storage facility
in General Santos.
Job Caravan To help tribal With help from Local 1,450 indigenous
Program communities increase Government Units, workers
their income source by Philippine Employment
providing job Services Office
opportunities to their Managers, tribal
indigenous inhabitants. leaders and company
service providers.
Giving Hope in a To create sustainable In partnership with 2, 800 farmers were
Coconut social impact by which Friends of Hope given 3,700 seedlings
coconut farmers would
be given subsidy and
high quality seedlings
which they can either
grow into trees or breed
more seeds. Moreover,
they will be trained so
 they may gain market
access and improve
their market linkage.
LinkSFarM Project To help partner farmers Department of Agrarian Barangay-based small
by letting them engage Reform groups from 10 regions,
in business and become 21 provinces and 31
self-sufficient to sustain project sites
their livelihood.
KidZania Marine To emphasize the In collaboration with Children attendees as
Conservation Lab crucial role that the World Wildlife Fund for they spark their
facility can play in Nature (WWF) curiosity and marine
raising awareness and Philippines. sustainability.
interest among kids on
the value of marine
research and
conservation.
EMPLOYEE CNPF gives TUNA OEM DIVISION Residents of Upper
ENGAGEMENT opportunities for its partners with Upper Labay, General Santos
ACTIVITIES subsidiaries to have Labay, General Santos City and Region 12
independent projects City for a tree planting
that let them give back activity and in
to the communities and coordination with EMB-
causes they are DENR REGION 12, they
passionate about. also participated in the
Environment Month
Orchestrated Clean Up.
The MILK division Pupils of Taguig
through its “Adopt and Integrated School (TIS)
Paint a School
Building,” conducted a
milk feeding, lunchbox
and school supplies
giving at Taguig.
Kapatid for Marawi To provide relief In partnership with Go CNPF was able to help
operations and Negosyo and the alleviate the hunger of
humanitarian #KapatidForMarawi over 50,000 locals
assistance to those project. evacuated across the
violently victimized by city
the Terrorism attack in
Marawi City.
Protecting the Davao To promote sustainable In partnership with the Residents and local
Gulf tuna fishing practices in World Wildlife Fund fisheries and companies
the Davao Gulf.

Appendix D-4: Quality of Corporate Governance

To evaluate the company’s quality of corporate governance, each committee of the board is evaluated
on a scale of 1 to 4 based on the roles that they must fulfill and criteria corresponding to these roles
provided in respect of the CFA Institute Corporate Governance Guide for Investors. The following table
summarizes the analysis:
Legend:
1 -The company did not follow the criteria at all,
2 -The company did not follow the criteria,
3 -The company followed the criteria, and
4 -The company has excellent policies on this criteria.
BOARD
Criteria Description Rating Company Policies
Independence Boards must be willing 4 The company’s manual states that
and able to effectively the board of directors must
scrutinize strategy and compose of at least three
 management independent directors or one-third
performance and set of the board whichever is higher. (4
reasonable out of 9)
compensation.
Competence Directors should add 4 The company ensures that the
value through skills or directors are honed with adequate
expertise in a particular knowledge and background in
field. handling the decision-making
procedures of the company by
setting up nomination
qualifications. Apart from that,
CNPF provides eight-hour (8)
orientation program covering SEC-
mandated topics on corporate
governance and introduction to
Corporation’s business, Articles of
Incorporation and Code of Conduct
to all first-time directors. All
directors are required to attend
annual four-hour (4) continuing
training program including courses
on corporate governance and
matters relevant to the
Corporation.
Board Members Board of at least 5 but 4 The Board of Directors consists of 9
no more than 15 members which is compliant to the
members required number of members.
Directorship Reasonable number of 4 The board currently have nine
board directorships. members with majority of which are
non-executive directors and four of
which are independent directors.
Accountability Governance practices 3 Roles and board commitments are
should reflect a board outlined and provided in the
that is answerable to its company’s manual although CNPF
owners. has mentioned that the election,
nomination, and remuneration
must be clearly identified and
presented, it has not yet provided
the actual metrics of the procedure
and breakdown.
Role Delegation Role of CEO and chair 4 The CEO position is held by Teodoro
should be separate Alexander Po while the Chairman of
the Board is occupied by
Christopher Po.
Committees Established Executive, 2 Current company’s committees are
Audit, Compensation, Audit, Corporate Governance,
Nominating, and Board Risk Oversight Committee
Compliance Committee and Related Party Transaction
Committee. Although stipulated
therein that the company may
establish other committees it may
seem necessary, it does not have
specific groups that cater concerns
such as Compensation, election and
Compliance.
Independent Boards must have 4 There are four independent
Directors greater of 2 or 20% directors namely Fernan Victor
independent directors. Lukban, Johnip Cua, Frances Yu,
and Eileen Grace Araneta.
AVERAGE SCORE 3.625
AUDIT COMMITTEE
 Criteria Description Rating Company Policies
Independent Audit Auditor should provide 4 The Audit committee is responsible
an impartial and for reviewing and monitoring the
professional opinion. senior management in maintaining
Independence is an adequate, effective and efficient
compromised when the internal control framework and is
author receives expected to provide assurance in
significant payments for areas of reporting, monitoring
non-audit work. compliance with laws, regulations
and internal policies.
Independence Board's Audit 4 The audit committee is led by
Committee should be independent director Fernan Victor
independent P. Lukban
Timely Reporting Auditors should 4 The Audit Committee are required
maintain transparency to meet with the Board at least
and communication every quarter without the CEO or
with the board other management team members
and periodically meet with the head
of the Internal Audit.
Integrity of Company’s financials 4 Statements are publicly disclosed
Financials should have integrity. with notes to help investors
(Items that raise understand how accounts were
concerns include settled. The committee also ensures
changes in auditors, that the external auditor has
irregularities over many adequate quality control
years, material procedures.
weaknesses in the
company’s controls,
certain restatements,
and excessive fees paid
for non-audit work)
Selection of Auditor Company should allow 4 The Audit Committee provides
shareholders to ratify robust process in screening,
the selection of the approving and recommending the
auditor appointment of an auditor. The
candidate must be approved by the
Board and ratified by the
shareholders.
AVERAGE SCORE 4.00
SHAREHOLDERS’ RIGHTS
Criteria Description Rating Company Policies
Shareholder Rights Right to Dividend 4 Shareholders are entitled to
dividends subject to the policies
provided and clearly explained by
the Board.
Shareholder Rights Right to Nominate 4 All shareholders are given the
Candidates to the Board opportunity to nominate candidates
of Directors to the Board of Directors.
Procedures of the nomination
process must be clearly discussed
by the Board and Corporation must
fully and promptly disclose all
information regarding the
experience and background of
candidates to give ample time for
the shareholders to study the
candidates’ qualification and
credibility.
Shareholder Rights Appraisal Rights 4 Voting results must be posted and
include a breakdown of the
approving and dissenting of votes
 raised during the meeting.
Shareholders may exercise their
right to dissent and demand
payment for the fair value of their
shares, as stated in Section 81 of
the Corporate Code of the
Philippines.
Shareholder Rights Right to Information 4 The Board must disclose and
provide clear explanation of the
voting procedures, as well as
removal of excessive or
unnecessary costs and other
administrative impediments.
Further, the Board disseminates
Notice of Annual and Special
Shareholders’ Meeting with
sufficient information at least 28
days before the meeting. Minutes of
the Annual and Special
Shareholders’ Meeting are to be
made available five business days
from the end of the meeting.
Shareholder Rights Right to call special 4 The company issues the right to
meetings propose the holdings of meetings
and items for inclusion in the
agenda to all shareholders,
including the minority and foreign
shareholders.
AVERAGE SCORE 4.00
OVERALL RATING 3.875

Source: Company Data

Appendix E: Financials
Appendix E-1: Statement of Comprehensive Income
In Millions 2015A 2016A 2017A 2018A 2019E 2020F 2021F 2022F 2023F
(except per share
values)
Net Sales 23,325 26,796 32,907 37,885 41,863 46,468 51,487 56,893 62,753
Cost of Goods 17,128 19,678 25,973 29,738 32,638 35,982 39,595 43,451 47,594
Sold
Gross Profit 6,196 7,118 6,935 8,148 9,225 10,486 11,892 13,442 15,159
Other Income 100 272 428 536 435 554 637 694 736
6,297 7,390 7,363 8,683 9,660 11,040 12,528 14,136 15,894
Operating
Expenses 3,529 3,725 3,893 4,721 5,133 5,604 6,178 6,827 7,530
Finance Costs 1 77 107 197 321 359 405 455 517
Other Expenses 36 51 40 164 88 106 125 156 149
3,566 3,854 4,040 5,081 5,541 6,069 6,709 7,438 8,197
Profit Before Tax 2,730 3,535 3,322 3,602 4,119 4,971 5,819 6,698 7,697
Income Tax
797 880 770 768 1,030 1,243 1,455 1,674 1,924
Expense
Profit for the Year 1,934 2,656 2,552 2,834 3,089 3,728 4,364 5,023 5,773
Other Comprehensive Income (Loss)
Reclassified Subsequently to Profit or Loss
Currency
translation 29 -14 5 3 - - - - -
adjustment
Not Reclassified Subsequently to Profit or Loss
Remeasurement
-24 22 5 16 - - - - -
gains on
retirement benefit
obligation
5 9 10 18 14 16 19 22 22
Total
Comprehensive 1,939 2,664 2,561 2,853 3,103 3,745 4,383 5,045 5,795
Income
Basic and diluted
earnings per P0.8664 P0.7500 P0.7204 P0.8001 P0.8759 P1.0571 P1.2374 P1.4243 P1.6361
share
Appendix E-2: Statement of Financial Position
In Millions 2015A 2016A 2017A 2018A 2019E 2020F 2021F 2022F 2023F
(except per share
values)
Cash and cash
722 696 1,549 1,676 587 4,273 6,503 9,067 12,615
equivalents
Trade and other
3,593 3,955 5,329 7,076 6,538 7,257 8,040 8,885 9,800
receivables - net
Due from related
41 91 186 123 147 184 211 210 239
parties
Held-to-maturity
15 13 - - - - - - -
investments
Inventories - net 5,926 7,529 6,995 11,656 13,860 12,816 14,102 15,476 16,951
Biological assets 31 35 23 43 48 50 51 61 66
Prepayments and
other current 219 440 477 467 520 681 839 982 1,199
assets - net
Prepaid income
- - 126 - - - - - -
tax
Total Current
10,547 12,758 14,684 21,042 21,700 25,260 29,746 34,681 40,870
Assets
Property, plant
and equipment - 3,134 3,945 4,936 5,458 6,881 7,457 7,927 8,307 8,640
net
Intangible assets -
2,955 3,054 3,584 3,526 3,526 3,526 3,526 3,526 3,526
net
Deferred tax
82 118 95 219 174 200 221 263 272
assets
Held-to-maturity
investments - net 13 - - - - - - - -
of current portion
Other non-current
51 57 60 92 90 99 110 126 135
assets
Total Non-current
6,235 7,175 8,675 9,296 10,671 11,283 11,783 12,223 12,574
Assets
TOTAL ASSETS 16,782 19,932 23,359 30,337 32,371 36,542 41,529 46,903 53,444
Trade and other
3,864 4,730 5,031 7,007 7,154 7,689 8,461 8,928 9,780
payables
Borrowings -
2,250 671 2,089 3,210 2,734 3,059 3,455 3,883 4,413
current portion
Income tax
147 149 - 99 127 125 121 174 197
payable
Due to related
14 90 22 11 51 64 46 54 70
parties
Finance lease
obligation - - - - 27 - - - - -
current portion
Total Current
6,274 5,639 7,142 10,353 10,065 10,937 12,083 13,039 14,459
Liabilities
Borrowings - net
- 1,634 1,620 3,103 3,095 3,463 3,911 4,396 4,995
of current portion
Retirement benefit
157 118 108 78 51 56 62 68 75
obligation
Deferred tax
4 3 8 - - - - - -
liability
Finance lease
obligation - net of
- - - 79 - - - - -
non-current
portion
Total Non-current
161 1,754 1,735 3,260 3,146 3,519 3,973 4,464 5,071
Liabilities
TOTAL
6,435 7,393 8,876 13,613 13,211 14,457 16,057 17,504 19,530
LIABILITIES
Share capital 2,361 3,541 3,542 3,542 3,542 3,542 3,542 3,542 3,542
Share premium 4,912 4,912 4,928 4,937 4,937 4,937 4,937 4,937 4,937
Share-based
compensation 5 5 8 8 8 8 8 8 8
reserve
Other reserves 31 31 31 31 31 31 31 31 31
Currency
translation 49 35 40 43 60 59 65 72 82
adjustment
Retained earnings 2,990 4,015 5,934 8,164 10,582 13,509 16,890 20,810 25,314
TOTAL EQUITY 10,347 12,539 14,483 16,725 19,159 22,085 25,473 29,400 33,914
TOTAL
LIABILITIES AND
16,782 19,932 23,359 30,337 32,371 36,542 41,529 46,903 53,444
SHAREHOLDER'S
EQUITY
Appendix E-3: Statement of Cash Flow
In Millions 2015A 2016A 2017A 2018A 2019E 2020F 2021F 2022F 2023F
(except per
share values)
Cash Flows from Operating Activities
Profit before tax 2,730 3,535 3,322 3,602 4,119 4,971 5,819 6,698 7,697
Depreciation and
152 359 525 727 577 724 830 920 967
amortization
Finance costs 1 77 107 197 321 359 405 455 517
Loss on
inventory 18 19 12 95 53 52 63 79 74
obsolescence
Provisions 8 - 3 93 30 38 53 71 60
Loss on
impairment of 13 5 1 51 22 25 32 43 38
input VAT
Unrealized
foreign exchange 11 -5 -130 45 - - - - -
loss (gain) - net
Retirement
58 34 40 42 57 55 62 68 77
benefit expense
Loss on
impairment of - - - 37 - - - - -
goodwill
Loss on decline
in value of 4 7 11 22 17 18 21 23 24
inventories
Doubtful
accounts 6 94 6 14 45 60 37 49 62
expense
Share based
compensation 2 - 3 9 - - - - -
expense
Gain (loss) on
disposal of
4 -5 -3 2 - - - - -
property, plant
and equipment
Interest income -8 -6 -5 -8 -9 -9 -9 -11 -12
Reversal of
allowance of - -6 -56 -29 -52 -61 -52 -63 -71
inventory
Reversal of
- -70 -54 -72 -82 -84 -95 -106 -115
accruals
Gain from sale of
- -4 -158 -124 -69 -109 -154 -144 -148
scrap - net
Reversal of
allowance for
- - -33 - - - - - -
doubtful
accounts
Loss on
impairment of - - 2 - - - - - -
PPE
Operating cash
flows before
2,999 4,035 3,592 4,703 5,028 6,038 7,012 8,084 9,171
working capital
changes
Decrease
- - - - - - - - -
(increase) in:
Trade and other
-780 -313 -1,213 -1,806 539 -719 -784 -844 -915
receivables
Due from related
171 -50 -95 63 -24 -36 -27 0 -29
parties
Inventories -537 -1,548 725 -4,625 -2,204 1,045 -1,287 -1,373 -1,476
Biological assets 6 -3 12 -20 -5 -2 -1 -10 -5
Prepayments and
other current 1 -225 -33 -42 -48 -101 -51 -45 -83
assets
Other noncurrent
99 -7 -2 -33 3 -9 -11 -16 -9
assets
Increase (decrease) in:
Trade and other
-405 808 353 1,954 146 536 772 467 851
payables
Due to related
-1,378 -21 -68 -11 41 13 -19 8 16
parties
Other noncurrent
- - - 100 - - - - -
liabilities
Exchange
difference on
translating -66 - - 21 - - - - -
operating assets
and liabilities
Cash generated
110 2,676 3,271 304 3,475 6,763 5,606 6,270 7,520
from operations
Contribution to
the retirement -31 -41 -44 -49 -53 -60 -66 -72 -80
fund
Income tax paid -783 -924 -1,019 -681 -1,030 -1,243 -1,455 -1,674 -1,924
Interest received 6 5 4 7 8 8 8 10 11
Net cash from
(used in)
-698 1,715 2,212 -418 2,400 5,468 4,093 4,533 5,527
operating
activities
Cash Flows from Investing Activities
Acquisitions of
property, plant -1,068 -1,559 -1,532 -1,308 - - - - -
and equipment
Proceeds from
sale of property,
364 358 19 78 - - - - -
plant and
equipment
Acquisitions of
- -61 -538 - - - - - -
intangible assets
Maturities of HTM
151 14 13 - - - - - -
investments
Interest income
3 1 0 - - - - - -
received
Acquisitions of
subsidiaries (net -3,371 -11 - - - - - - -
of cash acquired)
Net cash used in
investing -3,921 -1,259 -2,038 -1,230 -2,000 -1,300 -1,300 -1,300 -1,300
activities
Cash Flows from Financing Activities
Proceeds from
2,250 1,544 2,665 4,050 - 694 844 912 1,129
borrowings
Repayment of
- -1,490 -1,261 -1,446 -484 - - - -
borrowings
Dividends paid -446 -472 -638 -638 -685 -818 -1,002 -1,126 -1,291
Finance costs
- -65 -105 -191 -321 -359 -405 -455 -517
paid
Proceeds from
issuance of share 2,272 - 17 - - - - - -
capital
Net cash from
(used in)
4,076 -483 679 1,776 -1,490 -482 -563 -669 -679
financing
activities
Net Increase
(Decrease) in
-542 -27 853 128 -1,090 3,686 2,230 2,565 3,548
Cash and Cash
Equivalents
Cash and Cash
Equivalents, 1,264 722 696 1,549 1,676 587 4,273 6,503 9,067
Beginning
Cash and Cash
Equivalents, 722 696 1,549 1,676 587 4,273 6,503 9,067 12,615
Ending

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