RFM Corp: Philippines #1 Ice-Cream and Pasta King and a Revitalized Concepcion Family = The Next Universal Robina Corporation (URC)?

RFM Corp (PSE: RFM) is the #1 ice-cream and pasta maker in the Philippines with a domestic market share of 76-78% and 39-40%, accounting for 27% and 24% of FY14 group sales respectively. It is also the main supplier of bun requirement to McDonald’s Philippines and its high speed bun production business has expanded to serve other quick-serve restaurants (QSR) customers that include Wendy’s and KFC, contributing to 36.5% of group sales. Other consumer brand products include Selecta Fortified Milk (around 8% market share), Selecta Moo chocolate milk, White King cake and sauce mixes, Sunkist juice and tea beverages, VitWater vitamin water, Alo Green Tea, accounting for 12-13% of FY14 group sales. About half of RFM’s retail sales are generated via modern trade while the other half comes from traditional/general trade. Around 98% of RFM’s revenue are generated from domestic sales, with Luzon accounting for more than two-thirds, and about 2% are generated from export sales. Recent corporate activities include the (1) acquisition of #2 pasta brand Royal from Unilever Philippines in Jan 2014, (2) divestment of Swift meat processing business in 2012; (3) divestment of Philtown Philippines in 2013. RFM was incorporated on 16 Aug 1957 as Republic Flour Mills by a group of entrepreneurial families: Concepcion family (33.5% of equity), Server family 7.4%, Segovia family 2.8%. RFM is now led by third-generation leader Jose Ma “Joey” Concepcion who succeeded as CEO since 1989.

1) What Makes It a Wide-Moat Business?

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