RHB Bank Singapore is reiterating its &ldquo buy&rdquo recommendation on Food Empire with a higher target price of $2.95 from $2.72 previously.

 

In a Sept 25 report, analyst Alfie Yeo says: &ldquo We continue to like Food Empire for its longer-term growth prospects, driven by capacity expansion. We believe its latest round of fund raising will enable it to have more cash resources to drive growth via capacity expansion, brand investment initiatives, and possible acquisitions.&rdquo

 

The group has recently announced a placement of $42 million via 17 million treasury shares, priced at $2.52 per share, representing a discount of 5.38% to Sept 23&rsquo s volume-weighted average price (VWAP).

 

The way Yeo sees it, the placement will help to broaden institutional investor base and the additional funding will enable Food Empire to pursue growth opportunities, optimise its balance sheet and reinforce long-term investor confidence. It also helps to monetise its treasury shares, which were bought back from the open market at a net weighted average cost of 90.1 cents.

 

Food Empire&rsquo s share base will increase to 547 million shares as a result. &ldquo Based on our computation, our FY2025-FY2026 EPS will be diluted by approximately 2% and 3.4% each,&rdquo says Yeo.

 

&ldquo We view this fund-raising exercise as an opportunity to place out shares at a favourable price. Proceeds will be used for working capital, capex and operational needs,&rdquo says Yeo, while adding that he expects excess cash to be deployed for more capacity expansion, brand investment initiatives, and possible M& A to drive further growth.

 

Growth in the medium term will be driven by more production facilities which will boost sales volume. Malaysia&rsquo s snack production capacity expansion was completed in 1H2025. Capacity will increase by 50% and revenue contribution is expected by 3QFY2025.

 

In Kazakhstan, the group&rsquo s first new coffee-mix factory is scheduled to open by FY2025. It will increase its production capacity for coffee mixes by 15%. In Vietnam, a new freeze soluble coffee manufacturing facility should begin operations by FY2028.

 

Finally, in India, it is expanding its spray-dried soluble coffee manufacturing capacity by 60%. and is scheduled to operate by FY2027. With these growth drivers intact, the group is well positioned for medium to longer term growth.

 

&ldquo Growth momentum remains strong and revenue continues to be driven by strong demand and sell though in existing markets,&rdquo says Yeo.

The placement is expected to broaden the company&rsquo s investor base and position it for future growth opportunities

 

[SINGAPORE] Food Empire raised around S$42.8 million in gross proceeds through the placement of 17 million treasury shares at S$2.52 apiece, the company announced on Wednesday (Sep 24). 

 

This brings its issued share capital, excluding treasury shares, from 529.8 million to 546.8 million shares. 

 

In addition to enhancing the trading liquidity of Food Empire shares, the placement is expected to broaden its institutional investor base, position the group to pursue growth opportunities, optimise its balance sheet and reinforce long-term investor confidence. 

 

Through the placement, the company has raised net cash proceeds of around S$41.7 million and monetised treasury shares that it acquired through substantial share buybacks at a net weighted average cost of S$0.90 apiece. 

 

Food Empire&rsquo s group chief executive and executive director Sudeep Nair said the response the placement received from institutional and strategic investors was &ldquo positive&rdquo and &ldquo sets a new benchmark going forward&rdquo . 

 

The placement price represents a premium of 3.27 per cent to the 30-day volume weighted average price (VWAP) of shares of Food Empire. 

 

Placement shares were priced at a discount of around 5.38 per cent to the VWAP of S$2.6634, based on trades done on the Singapore Exchange on Tuesday, the last trading day before the placement was announced. 

 

Nair noted that a &ldquo fair and resilient&rdquo share price helps enhance the group&rsquo s flexibility in considering shares as a potential tool in future corporate or strategic initiatives.  

 

Food Empire said that it plans to use the net proceeds for working capital purposes.

 

On Tuesday, when it announced the placement, the company said the shares would not be offered for sale to any existing company directors or substantial shareholders.

 

Food Empire Holdings could be a part of the new index the Singapore Exchange (SGX) is launching, says CGS International analyst William Tng.

 

&ldquo Our screening has identified 55 stocks that could be potential candidates for this index. We note that Food Empire also meets our screening criteria. This new index could be a benchmark for either active fund management or a passive ETF (exchange-traded fund),&rdquo Tng writes in his report dated Sept 18. The list includes ComfortDelGro, iFast Corp, Yangzijiang Financial and UMS Integration.

 

In addition, Food Empire could focus on consolidating its brand and market share gains in FY2027. Tng notes that the group&rsquo s Vietnam revenue grew by 36% y-o-y in FY2024, with management targeting for a growth of at least 32% y-o-y for FY2025.

 

Even though efforts to build its brand presence and expand market share has temporarily depressed its net margins for Vietnam, reported under its Southeast Asia segment, revenue for Food Empire&rsquo s Vietnam market may grow at a more &ldquo manageable&rdquo 15% over FY2026 and FY2027. At the same time, the group&rsquo s net margins for this particular market may normalise as its brand building efforts moderate.

 

Given this, Tng has increased his overall gross margin assumption by 0.75 percentage points for FY2027, leading to a 5.1% increase in his earnings per share (EPS) estimates for the same financial year.

 

The analyst has maintained his &ldquo add&rdquo call with a higher target price of $3.09, from $2.94, the second increase in two months. Tng had increased his target price to $2.94 from $2.73 in an Aug 13 report after Food Empire&rsquo s 1HFY2025 results.

 

The new target price, resulting from the higher FY2027 EPS estimate, is based on an unchanged 3 standard deviations (s.d.) and an FY2027 P/E of 17 times.

 

To Tng, Food Empire should consider a bonus issue to improve its trading liquidity. &ldquo Year-to-date, we note that three SGX-listed small caps have announced bonus issues, including Oiltek International Ltd whose three-month ADTV (average daily trading volume) quadrupled from $0.28 million pre-bonus issue, to $1.15 million post the bonus issue,&rdquo the analyst notes.

The bank maintains a &lsquo buy&rsquo call after revisiting its Vietnam operation

 

[SINGAPORE] Shares of Food Empire Holdings (FEH) surged as much as 5.4 per cent on Thursday (Sep 18), two days after Maybank raised its target price.

 

The stock climbed S$0.14 to an intraday high of S$2.73 as at 11.10 am, later paring some gains to end the day 2.7 per cent higher at S$2.66. Nearly 1.5 million shares had changed hands.

 

On Tuesday, Maybank analyst Jarick Seet raised the target price of company&rsquo s shares to S$2.92, from S$2.62, and maintained a &ldquo buy&rdquo call after revisiting its Vietnam operation. 

 

Seet said that the positivity stemmed from FEH being on track to deliver an estimated US$100 million of revenue in 2025 &ndash becoming the third-largest instant coffee player in Vietnam &ndash and its plans for product innovations to grow revenue in new segments.

 

He said: &ldquo With its strong pipeline of projects ahead, we believe FEH will continue to grow steadily in (the) coming years.&rdquo  

 

&ldquo A bonus share issue may also be a possibility to improve liquidity and reward shareholders,&rdquo he added.

 

UOB Kay Hian last month also raised its target price for FEH to S$2.73, from S$2.40, and maintained its &ldquo buy&rdquo call as its first-half results beat expectations. The company on Aug 13 posted top-line growth for the first half of 2025.

 

Sudeep Nair, FEH group chief executive, said that the company is &ldquo on track to deliver... another record-breaking performance in FY2025&rdquo after the results.

 

Last year, FEH invested US$80 million in a new freeze-dried soluble coffee manufacturing facility in Vietnam.

 

Jarick Seet of Maybank Securities has raised his target price for Food Empire Holdings following another site visit to the company' s operations in Vietnam.

 

He believes that with the expected growth from Vietnam, India, Kazakhstan and other Asean markets, Food Empire will see its Russia business, which generates 30% of the revenue, an increasingly smaller proportion of revenue in the coming years.

 

" We re-visited Food Empire&rsquo s Vietnam operation and facilities and came away more positive," writes Seet in his Sept 16 note, as he kept his " buy" call along with a higher target price of $2.92 from $2.62.

 

" We believe that Food Empire Vietnam is on track to deliver an estimated US$100 million of revenue in the current FY2025 and has also become the third-largest instant coffee player in Vietnam," says Seet.

 

In 1HFY2025, the company grew its revenue from southeast Asia by 25% y-o-y to US$77.5 million. Vietnam, specifically, led the charge with growth of 37% y-o-y, capturing market share from competitors.

 

The company is now producing around two million satchets a day. To support the growth, Food Empire is in the midst of expanding its production capacity in Vietnam by 15% next year and another 30% in 2027.

 

Seet expects both revenue and margin to remain strong in the current 2HFY2025 due to lower raw material costs, and that Vietnam should continue to be the company' s main growth driver.

 

" With its strong pipeline of projects ahead, we believe Food Empire will continue to grow steadily in the coming years. A bonus share issue may also be a possibility to improve liquidity and reward shareholders," says Seet, whose revised target price is based on a valuation multiple of 19x FY2025, up from 17x.

 

William Tng of CGS International, meanwhile, has reiterated both his " add" call and target price. However, Tng already has a bullish target price of $2.94.

 

Besides feeling upbeat over the prospects in Vietnam, Tng believes that continued business development and demand liquidity from the Monetary Authority of Singapore (MAS)&rsquo s $5 billion Equity Market Development Programme (EMDP) in 2HFY2025 will support his unchanged valuation basis of 3 s.d. above average P/E of 17x for FY2017 and FY2025.

 

Food Empire' s 3 cents per share interim dividend - the first time it has paid out dividends at the half-year mark, is a sign of the company' s confidence as well, reasons Tng.

 

Possible re-rating catalysts include improving operating margins on stabilising market demand sustained market share in its key market of Russia and a resolution to the Russia-Ukraine conflict.

 

Key downside risks, meanwhile, are an escalation in Russia-Ukraine conflict, thereby affecting its Russian operations, and also the depreciation of the ruble vs US dollar, leading to lower revenue in US$ terms.

 

Alifie Yeo has kept his " buy" call on Food Empire and has raised his target price to $2.72 from $1.67 previously, given its longer-term growth prospects driven by capacity expansion.

 

" We raise FY2026-2027 earnings on better-than expected growth traction, driven by higher manufacturing capacity across Malaysia, Kazakhstan, India, and Vietnam," says Yeo in his Sept 10 note.

 

The instant coffee maker' s 1HFY2025 headline earnings was a net loss as it booked a one-off US$33 million loss on its redeemable exchange notes. Otherwise, core profit before tax in the same half year to June was above expectations, up 45% y-o-y to US$43 million.

 

Despite the net loss, Food Empire is paying an interim dividend of 3 cents. The company typically only pays a final dividend.

 

In conjunction with the higher revenue, Food Empire improved its gross margin to 32.9%, which is above Yeo' s expectation as well.

 

Having turned more positive on the company' s prospects, Yeo has raised his FY2026 and FY2027 core earnings by 13% each to take into account higher revenue and better margins.

 

According to Yeo, growth in the medium term should be driven by higher production capacity, which will boost sales volume.

 

Besides Malaysia, Food Empire is in the midst of boosting capacity in Vietnam, India and Kazakhstan between the end of this year and FY2028.

 

Yeo observes that Food Empire has also re-rated from 10x FY2025 earnings to 17x FY2025 earnings, in line with the broader market since his last update, on optimism over positive fund flows.

 

In view of the market rerating and his positive forecast, Yeo derives the new target price of $2.72 after pegging the stock to 18x blended FY2025 and FY2026 earnings, from a lower valuation multiple of 12x FY2025 earnings previously, which is in line with its peers&rsquo rerating.

 

Yeo warns that downside risks will come from disruptions in operations due to the Russia-Ukraine conflict, and the negative effect of a change in the value of the ruble and other emerging market currencies.

Excluding the fair value loss of US$32.6 million, net profit after tax stands at US$31.5 million

 

[SINGAPORE] 

This resulted from a US$32.6 million fair value loss on redeemable exchangeable notes issued by the company, as its share price rose significantly from the level at which the notes can be exchanged for shares. 

 

&ldquo Mark-to-market adjustments to the redeemable exchange notes are required to be recognised in the group&rsquo s interim consolidated income statement, even though they are non-cash and do not reflect operating performance,&rdquo Food Empire said.

 

Loss per share in H1 2025 stood at US$0.0027, a reversal from earnings per share of US$0.0449 in H1 2024.

 

Excluding the fair value loss, Food Empire&rsquo s net profit after tax stood at US$31.5 million in H1 2025. This represents a 35.7 per cent increase compared to the year-ago period, on the back of higher revenue and gross margins across most core segments.

 

Revenue rose 21.7 per cent to US$274.1 million in H1, from US$225.2 million previously. Cost of sales also grew, by 16.7 per cent to US$183.9 million from US$157.6 million in the year-ago period. 

 

Group chief executive officer Sudeep Nair said Food Empire is &ldquo on track to deliver yet another record-breaking performance in FY2025, barring unforeseen circumstances&rdquo . 

 

&ldquo Our optimism is underpinned by the strength and leading position of our brands across all our markets as we continue to deliver robust results from our brand-building efforts,&rdquo he added. 

 

Food Empire declared an interim dividend for the first time, &ldquo as a demonstration of strong business confidence&rdquo . The dividend of S$0.03 per share will be paid out on Sep 10.

 

Growth in core segments

For H1, the group said its Russia segment generated the highest revenue among its core segments, delivering a 21.6 per cent increase in sales to US$82.8 million. 

 

&ldquo This was mainly due to price gains coupled with appreciation of the Russian ruble against the US dollar. In local currency terms, revenue rose by 17 per cent,&rdquo it added. 

 

Vietnam, its fastest-growing market, generated more than 60 per cent of the contributions from South-east Asia. The segment recorded US$77.5 million in revenue.

 

Revenue from the group&rsquo s Ukraine, Kazakhstan and Commonwealth of Independent States segment grew 19.4 per cent to US$68.4 million. This was due mainly to price gains and increased sales volumes from certain markets. 

 

The group&rsquo s South Asia segment reported revenue of US$37 million, 25.1 per cent higher than in H1 2024. This was attributed to strong demand for both freeze-dried and spray-dried soluble coffee.

 

Food Empire said its current project pipeline includes its first coffee-mix manufacturing facility in Kazakhstan in Central Asia, which is expected to be completed by the end of the year. 

 

In India, the expansion of its spray-dried soluble coffee manufacturing facility by 2027 will increase the facility&rsquo s capacity by 60 per cent. A new freeze-dried soluble coffee manufacturing facility will open in Vietnam in 2028.

On Jul 15, independent director Adrian Chan exercised 105,000 share options at S$0.802 apiece. He is also head of corporate at the law firm, Lee & Lee, and has been in legal practice for over three decades. He was first appointed to the board of Food Empire Holdings : F03 +6.6% in January 2022. This took his direct interest in the multinational food and beverage manufacturing and distribution group to 0.02 per cent.

 

Food Empire owns proprietary brands such as MacCoffee, CafePHO, and Kracks, with MacCoffee leading in core markets through localised, innovative brand-building. 

 

In its Q1 FY2025 (ended Mar 31) business update, the group reported a 16.3 per cent increase in topline revenue from Q1 FY2024 to US$136.6 million. Food Empire has long identified Asia as a key growth region, with South-east Asia &ndash led by Vietnam &ndash now its largest revenue contributor, and recent investments including a coffee-mix facility in Kazakhstan set to complete by end-2025.

 

On Jul 9, Food Empire announced that it will invest US$37 million to expand its coffee facility in India, boosting capacity by 60 per cent. The project, part of its vertical integration strategy, begins in Q4 2025 and completes by end-2027.

 

The group remain cautiously optimistic about sustaining strong top-line growth, backed by brand building and market leadership. Its Asia-focused strategy and robust expansion pipeline positions it well for emerging market demand.

 

At the same time, it maintains it continues to monitor macro risks &ndash such as climate-driven coffee price volatility and trade tensions &ndash and will adjust strategies to mitigate potential impacts. The group also remains confident that its strong brand equity will provide resilience against the direct impact of tariffs in the geographical segments where it operates.

 

With a return on equity of 17.8 per cent, the stock&rsquo s P/E ratio has increased from 7x to 17x this year, while average daily trading turnover at S$1.21 million in the 2025 year to Jul 17 has almost doubled the S$670,000 in 2024.

 

William Tng of CGS International has again raised his target price for Food Empire, on expectations that more new business opportunities are on the way with the help of well-placed investor Ikhlas Capital.

 

Just on June 25, Tng had raised his target price for the counter from $1.95 to $2.28. In his July 17 note, he is further hiking his target price to $2.73.

 

In an after market announcement on July 17, Food Empire announced a partnership with Capital A Bhd, an investment holding company, to co-develop and launch a new range of ready-to-drink beverages.

 

Specifically, the collaboration between their respective subsidiaries &ndash Empire International and Santan Food Services &ndash will kick off with a Vietnamese iced coffee product to be sold on AirAsia flights and through retail channels across the region.

 

This collaboration also paves the way for Food Empire and Santan to explore further co-branded and private label initiatives across a wider range of beverage and snack products.

 

The initial product rollout will span both in-flight and on-ground touchpoints.

 

Passengers flying with AirAsia can look forward to a co-branded Vietnamese iced coffee experience onboard.

 

On the ground, the same product line will also be made available at selected retail outlets under the Santan brand.

 

" The collaboration with Santan is, in our view, one of a number of business-related initiatives that Ikhlas Capital could be working on together with Food Empire," says Tng. " We believe there could be further business collaboration announcements in time to come."

 

While Tng acknowledges that the current collaboration with Santan may not be immediately earnings accretive for Food Empire, he expects it to improve the company&rsquo s brand awareness in Asia and allay investor concerns that Ikhlas Capital is only investing in for the 5.5% coupon on the redeemable equity notes issued by Food Empire.

 

Tng says that any potential share price weakness from the REN is a buying opportunity.

 

In addition, with the government soon to allocate $5 billion to fund managers to invest in smaller cap stocks, Food Empire stands to be a beneficiary and can enjoy a re-rating to towards its 3 sd P/E of 17x, suggesting a target price of $2.73.

 

In contrast, Tng had previously valued the company at $2.28, which is 14.2x FY26F P/E, 2s.d. above its 9-year average P/E of between FY2017 and FY2025.

 

Re-rating catalysts, according to Tng, includes improving operating margins on stabilising market demand sustained market share in its key market, Russia, and last but not least, a resolution to the Russia-Ukraine conflict.

 

On the other hand, key downside risks include the escalation in Russia-Ukraine conflict affecting its Russian operations, and the ruble&rsquo s depreciation vs. the US$, leading to lower revenue in US$ terms, which is Food Empire' s reporting currency.

 

Food Empire Holdings plans to invest US$37 million to expand the capacity of its spray-dried soluble coffee manufacturing facility in Andhra Pradesh, India by around 60%. Work will start in 4Q this year and be done by the end of 2027.

 

Besides the spray-dried soluble coffee manufacturing facility, Food Empire also has a manufacturing facility for freeze-dried soluble coffee in India. The company had previously announced plans to set up another freeze-dried soluble coffee manufacturing facility in Binh Dinh, Vietnam, which is expected to be completed by 2028.

 

According to Food Empire, these expansion projects are part of its ongoing vertical integration initiatives so as to have better control over the entire coffee processing cycle, which will support the growth of its branded consumer business and sustain the leading position of its brands across its markets.

 

&ldquo Food Empire has enjoyed four consecutive years of record revenue growth driven by the stellar performance of our core branded consumer business," says group CEO and executive director Sudeep Nair.

 

" This has given us the confidence to expand our ingredients manufacturing business, which will not only position us strongly as a leading player in soluble coffee in Asia, but more importantly it will serve as a vital link to support the growth of our branded consumer business as we continue to invest in brand building activities across our markets," he adds.