Excerpts from Maybank KE report
Analysts: Jarick Seet & Eric Ong

Food Empire: Strong 1Q23E can be expected

Maintain BUY with an unchanged TP of SGD1.29


We expect demand for its products to remain strong especially in its core markets like Russia and Vietnam.

Food Empire

Share price: 
$1.01

Target: 
$1.29

Management is keen to do more marketing activities in Vietnam and we expect contribution from Vietnam to grow 20% YoY in FY23E.

Corporate share buy backs have also been consistent with the most recent purchase done at SGD1.01, its highest price ever bought on the 3rd of April 2023 which we believe shows the strong confidence of its outlook.

With a positive outlook and an undemanding valuation, we maintain BUY a unchanged TP of SGD1.29,based on 11x FY23E P/E.

 

 FY23E – Another potential record year

 

Strong 1H2023

We expect the next two quarters to be much stronger YoY as the (Russia-Ukraine) conflict started midway during 1Q22.”

-- Maybank KE

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

 

CafePho323Cafe Pho is Food Empire's No.1 instant coffee brand in Vietnam. 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.

We also expect interim dividends to be a possibility in the near future due to its strong cash flow generation and strong balance sheet.

 More legs to run

 
JarickSeet3.18Jarick Seet, analystFEH is currently trading at 8.9x core FY23E P/E, still a steep discount despite strong share price performance recently, versus both its private and listed valuations of global peers.

As such, we think that it could be an attractive target for bigger competitors given its strong presence in Russia and Vietnam.

With a positive outlook and resilience despite the ongoing Russia-Ukraine conflict, we maintain BUY.


Full report here. 

You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings2.140-0.510
Avi-Tech Electronics0.265-
Best World1.630-0.070
Broadway Ind0.087-
China Sunsine0.3900.005
ComfortDelGro1.350-0.020
Delfi Limited0.9650.010
Food Empire1.4400.010
Fortress Minerals0.2800.010
Geo Energy Res0.330-0.005
GSS Energy0.027-
Hong Leong Finance2.480-
Hongkong Land (USD)3.3800.100
InnoTek0.4500.010
ISDN Holdings0.320-0.010
ISOTeam0.035-
IX Biopharma0.0450.004
Jiutian Chemical0.025-
KSH Holdings0.250-
Leader Env0.051-0.001
Medtecs Intl0.132-0.001
Nordic Group0.335-0.005
Oxley Holdings0.091-
REX International0.1330.010
Riverstone0.675-0.050
Sinostar PEC0.140-0.002
Southern Alliance Mining0.600-
Straco Corp.0.5300.015
Sunpower Group0.2300.005
The Trendlines0.0850.002
Totm Technologies0.023-0.001
Uni-Asia Group0.840-0.010
Wilmar Intl3.320-0.020
Yangzijiang Shipbldg1.7500.010
 

We have 572 guests and no members online

rss_2 NextInsight - Latest News