| Del Monte Pacific says it is making "significant progress" in its bid to raise up to US$400 million from a consortium of investors who have already submitted a non-binding term sheet. Singapore-listed Del Monte aims to sell a stake in its high-performing subsidiary, 100%-owned Del Monte Philippines Inc. (DMPI). This is to address a capital deficit of US$590 million as of Jan 31, 2026 (ie its total liabilities exceed its total assets by US$590 million), which was primarily caused by the impairment of its investments in its US operations. On a 3Q earnings call on 11 March 2026, CFO Parag Sachdeva said: "We are looking at raising anywhere up to US$400 million from this particular initiative. "We are looking at equity raise more at the DMPI level. That's the most important asset and it will actually unlock the valuation of the business". Asked for a timeline, he was cautious due to regulatory considerations. "I would hesitate to give you a timeframe whether we can complete this in the next couple of months." "But we absolutely are prioritizing the same and can assure you that we will have a more definitive update if we progress by the next investor call". |
Del Monte's strategic decision in 2025 to "cut the cord" with its U.S. operations has revealed a leaner, highly profitable, and market-dominant Asian food conglomerate.
It has a winning combination of a 100-year brand legacy, a near-monopoly in the Philippine market and strong Asian sales.
Strong Momentum
The company's operational performance remains exceptional. As Mr Sachdeva reported: "We did sustain a very strong growth trajectory in the third quarter".
Net profit for 3Q (ended 31 Jan 2026) significantly improved to US$10 million.
The nine-month figures reflect a similar success story with net profit reaching US$32.3 million on a combination of strong volume, strategic pricing, and cost management.
The implied PE for FY26 is ~3X (based on market cap of S$175 million).
Gross margins improved to 32.7% in 3Q and 33.2% for the nine months.
Because of its high debt of ~US$1 billion, which arose from a failed US operation over more than a decade, Del Monte's interest expense for 9MFY2026 amounted to a whopping US$55.3 million (-9.2% y-o-y).
This contributes to why the stock price is trading at a distressed valuation (9 cents, market cap: S$175 million), which will reverse if Del Monte can raise the US$400 million by selling a stake in its high-quality, cash-generative subsidiary.
The subsidiary DMPI raked in roughly US$85.9 million in net profit for 9MFY26 (which is more than double the parent's reported US$32.3 million as the latter had to bear large interest and corporate costs).
On a PE of, say, 15x, the subsidiary would be worth US$1.7 billion.
Management expects to maintain the recent operational momentum. Strategically, the company intends to regain its lost leadership position in South Korea "by the middle of the year with a better supply situation," while expanding fresh MD2 pineapple leadership in China, said Luis Alejandro, the Chief Operating Officer.
CFO Sachdeva noted favorable cyclical trends: "We are having tailwinds this year, which we do expect to continue in the fourth quarter". |
→ See the results Powerpoint deck here.
→ Watch a video recording of the 3Q earnings briefing here.
→ For more background on the events leading to the equity raising effort, see minutes of the Sept 2025 AGM here.
