It highlighted the relatively low valuation of Food Empire compared to IPO aspirant Oriental Kopi and peers in coffee-related businesses.
Since then, especially after Food Empire unveiled a strong set of FY24 results in Feb 2025, its stock has re-rated strongly, hitting $1.70 yesterday (and that's ex-dividend of 8 cents/share).
Food Empire's stock is +70% since the start of the year. Cafe Pho is Food Empire's best-selling instant coffee in Vietnam.
In a new business update, Food Empire said that its revenue had a solid start to the year, growing by 16% year-on-year to USD136.6m in 1Q2025.
This figure was a little bit better than what analysts expected.
And for the first time ever, the Southeast Asia segment has overtaken Russia as the largest revenue contributor.
This is a big deal as it validates the group's strategy that began years ago to derive revenue from different markets.
In 1Q25, Southeast Asia revenue hit USD40m, a jump of 33.8% year-on-year.
Driving this impressive growth was Vietnam, which saw a 44.6% surge in revenue, helped by things like a stronger sales team, effective marketing, and engaging with customers.
CEO Sudeep Nair with executive chairman Tan Wang Cheow.
Growth across major segments
Other key markets also saw positive growth in 1Q25.
The Ukraine, Kazakhstan, and CIS markets grew by 14.9% year-on-year to USD33.9m, largely driven by Kazakhstan, which now includes the contribution from Tea House LLP.
Market Segment
YoY Revenue Growth in 1Q2025
Southeast Asia
33.8%
- Vietnam
44.6%
South Asia
31.7%
Ukraine, Kazakhstan & CIS
14.9%
- Kazakhstan
29.0%
- Ukraine
9.9%
Russia
0.5%
South Asia (mainly India) also performed well, up 31.7% year-on-year, with high demand for coffee from production facilities running at full capacity.
Even Ukraine posted a 10% increase in revenue.
This widespread growth highlights Food Empire's ability to manage various market conditions, partly through adjusting prices to handle rising costs.
After a record year of sales in 2024, analysts project another record in 2025.
Looking ahead, Asia is expected to be the primary engine of growth.
Food Empire has some serious expansion plans underway in the region to boost capacity:
● In Vietnam, it's building a freeze-dried soluble coffee facility that's set to finish by 2028. This will make Food Empire a major player of instant coffee across Asia.
● In Malaysia, its snack manufacturing facility is being expanded, with completion expected in 1H2025.
This will increase capacity for potato chips, instant breakfast cereals, and assorted frozen convenience foods by about 50% by the third quarter.
Food Empire is also increasing the usage of its expanded production facility of non-dairy creamer.
● In Kazakhstan, the Group's first coffee-mix facility is expected to be completed by the end of 2025, projected to boost Food Empire's total coffee-mix capacity by 15%.
These investments and the successful move away from heavy reliance on Russia are seen as key reasons why investors are taking a shine to Food Empire.
Historically, being largely dependent on Russia meant Food Empire's shares traded at a lower price-to-earnings (P/E) ratio compared to its peers.
"With Russia no longer the dominant contributor and its Asia expansion plans in place, we believe the successful diversification justifies a P/E re-rating with a lower discount to its peers," said Jarick Seet of Maybank Research.
Analysts have now set higher price targets for the stock.
Analyst
Target Price
P/E (Year)
CGS International
S$1.95
13.4× (FY26)
UOB Kay Hian
S$1.98
15× (FY25)
Maybank
S$2.00
13× (FY25)
Positive future
Analyst
FY25 Net Profit (US$m)
Core EPS Growth (YoY)
FY25 Dividend Yield*
CGS International
53.9
8.4%
~4.6%
UOB Kay Hian
54.0
8%
4.5%
Maybank Research
65.0
22.9%
5.6%
*based on $1.70 stock price
Analysts are positive about the future, expecting growth to continue, supported by strong brand recognition and the ability to pass on price adjustments.
Potential positive drivers for the share price include strong financial results, better sales volumes, and improving profit margins.
They also see the potential for an attractive dividend yield.
Of course, risks like an escalation of the conflict in Ukraine or currency fluctuations could impact performance.
Overall, the anlayst reports suggest a positive trajectory for Food Empire, driven by strong performance in Asia and strategic capacity expansion.
