Excerpts from Maybank KE report
Analysts: Jarick Seet & Eric Ong
Food Empire: Strong 1Q23E can be expected
Management is keen to do more marketing activities in Vietnam and we expect contribution from Vietnam to grow 20% YoY in FY23E.
|FY23E – Another potential record year
“We expect the next two quarters to be much stronger YoY as the (Russia-Ukraine) conflict started midway during 1Q22.”
FEH delivered a record FY22 as revenue grew 24.5% YoY to USD398.4m driven by growth across most geographical segments, including Russia and the CIS region.
We expect demand to remain strong in Russia and the CIS region and stronger growth from Vietnam as well as the expansion of its no-dairy creamer facility which is expected to begin commercial production by 4Q23.
In India, spray dry and new freeze dry coffee plants continue to operate at full capacity but should yield higher margins due to cost reductions on the back of freight cost normalisation.
We also expect the next two quarters to be much stronger YoY as the conflict started midway during 1Q22.
|Share buybacks + possible interim dividend
We also expect interim dividends to be a possibility in the near future due to its strong cash flow generation and strong balance sheet.
FEH has also been undertaking share-buybacks in the open market, buying at higher prices than ever before and we expect that to continue as management concur that the company is deeply undervalued and remains confident of their outlook.
Full report here.