Monde Nissin Corporation: IPO Luck in The Philippines

In May 2021, a recent MBA graduate and retail investor, read an announcement about Monde Nissin Corporation launching an initial public offering of 3.6 billion shares at ₱13.50 per share. The company expected to raise ₱48.6 billion in the largest common share offering ever in the Philippines, while the country was still in the middle of a COVID-19 pandemic lockdown. However, economic and stock market conditions were expected to improve after the availability of vaccines and anticipated end of the lockdown. The investor planned to run a discounted cash flow valuation and comparable multiples analysis of Monde Nissin Corporation to determine if he should invest in the initial public offering. He also wanted to assess the attractiveness of the food industry and the merits of investing in the company, which was the market leader in all of its product categories.

This case was used as a final exam in a financial management course in the Asian Institute of Management’s MBA program. The case is recommended for undergraduate and graduate-level courses. It can be used to focus on corporate valuation, with additional class material and a discussion on valuation, capital budgeting, weighted average cost of capital, and capital structure. The case may also be used as an introduction to the IPO process in an investment banking elective. After working through the case and assignment questions, students will be able to<br><br><ul><li>describe the economy and stock market conditions during a COVID-19 pandemic lockdown;</li><li>assess the attractiveness of the food industry in the Philippines;</li><li>explain the various features of an IPO, such as primary share issuance and over-allotment option;</li><li>evaluate the merits of investing in the IPO of a company, based on an analysis of its strengths, weaknesses, opportunities, and threats, as well as its business strategy;</li><li>estimate the fair value of a stock after an IPO launch, by applying the DCF method and the capital asset pricing model;</li><li>use the comparable company multiples method of valuation; and</li><li>recommend and explain why a particular IPO is a good or poor investment choice.</li></ul>

• IPO analysis, discounted cash flow (DCF) valuation, comparable multiples valuation, weighted average cost of capital (WACC), stock valuation, Monde Nissin IPO, financial management, MBA program, capital budgeting, corporate valuation, investment banking elective, COVID-19 lockdown impact, Philippine food industry, stay-at-home orders, economic recovery post-vaccine, stock market conditions, business strategy analysis, overallotment option, fair value post-IPO.