Nascent Foodservice, which is in the early stages of development, is currently Mexico’s largest importer of food products. Currently they are seeking an aggressive growth strategy by acquiring other distribution centers and consolidating operations to reduce fixed costs. Having recently acquired Pasani Foods and Groupo Sur Promociones located in Mexico City, Mexico; the company now has access to Mexico City’s 19 million residents. There is many more opportunities within the Mexican market to buy other distribution centers and consolidate as they are over 25,000 smaller distribution centers nationwide.
What makes them so attractive is their ability to buy competitors at 2-4 times earnings when other food distribution centers in mature markets trade at 20-23 times earnings. This is due to the incredible amount of fragmentation in the Mexican food distribution market. This enables Nascent to quickly consolidate the industry and gain a larger distribution area.
Today they trade at a Price to Sales multiple of $2.34 – one of the best valuation methods for young companies like Nascent. The stock trades around .40 at this time, down from its 52 week high of $1.84. CCM Research has issued a speculative buy with a price target at $3.00 based on the Price to Sales Ratio and Price to Earnings Ratios.
Nascent Food Service Inc. stands as the only distributor of imported food and beverage products within Mexico. They distribute and market over 2,000 products nationwide. Currently they hold exclusive rights to distribute Miller Beer products in Baja, California. In addition to that they also imports products from Nestle, Haagen-Dazs, General Mills, Ferrarelle Water, Cora Italian Food Products, Bonafont Water, Avasoft Ice Cream, Mitsuki Asian products, Bonet European products, Kabbalah Energy Drink, and Jolly Rancher Soda.
They service 240,000 sales points including supermarkets, convenience stores and foodservice accounts like Wal-Mart, Costco, Soriana, Comercial Mexicana, AM/PM, 7-ELEVEN, OXXO and much more.
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