Petra Foods poised for growth as M&A opportunities begin to materialize

The firm is sitting on a $250m war chest.

Petra Foods is well poised for growth as it continues to aggressively expand its market share in emerging ASEAN economies, particularly Indonesia and the Philippines.

A report by OSK DMG notes that Petra is strongly positioned for the structural growth of modern trade channels in its two core markets, as its brand Goya enjoys greater shelf-space than its 10% market share suggests.

OSK DMG believes that mergers and acquisitions are in the pipeline for Petra, although it had not made any moves since it divested its cocoa ingredients business in December 2012.

“Since the divestment of its cocoa ingredients business in Dec 2012, management has not made any moves despite sitting on an estimated USD250m war chest. We believe M&As and/or new strategic product categories are likely to happen once ongoing litigation with Barry Callebaut (BARN SW, NR) reaches certainty, as this will add scale to its consumer business and strengthen its bargaining position with retailer,” noted OSK DMG.

Here’s more from the report:

In Jakarta, Indonesia, Petra Food’s (Petra) products continue to dominate the chocolate confectionary shelves, with a more than 50% space. 

This appears to be consistent across all formats, but particularly in convenience stores. We note that foreign brands are making an effort to expand their share, paying for promotional spaces, but the appeal is still more niche, ie towards higher-end consumers. 

Petra has a 10% market share in the Philippines but, in our recent visit to capital city Manila, we believe Goya’s shelf-space in modern trade is higher than that. 

With its “premium-looking” packaging, affordable price point and wide variety, we observed many interested consumers. Petra has been steadily growing its market share since acquiring the business in 2006 and we expect this to continue, given that it is benefiting from the growth of modern trade.