Many of you readers would be familiar with, or at least have some idea of, Food Empire Holdings' business which we have regularly reported on. 

Food Empire

Share price: 
$1.13

Target: 
$1.69

Still, a 26-page initiation report by CGS-CIMB's William Tng this week does contain fresh and useful insights.

Mainly, that has to do with the multi-year trends of some key financial metrics of Food Empire.

By nature, initiation reports are in-depth and cover a wider scope than quarterly reports focusing on analysing short-term results.

CGS-CIMB's target price for the stock is $1.69, much higher than the $1.36 of Maybank and UOB KH.

CafePho423Cafe Pho, a 3-in-1 coffee drink, is Food Empire's best-selling product in Vietnam. Cafe Pho was launched in 2013.Vietnam accounted for 19.5% of the group’s total revenue in 2021. Photo: CompanyWe adapted the contents of page 16-17 of the CIMB report to produce the 3 graphics below.

The first one shows how much -- and how suddenly -- Food Empire has lots of cash post-2022.

Given that its business has been free cash flow positive since 2015, Food Empire can be expected to stay cash-rich.
 
 NetCash CIMB10.23

• As at end Jun-2023, Food Empire was in a net cash position of US$61.1m and generated free cash flow of US$3.5m, notes CGS-CIMB.

• In 1H2023, Food Empire handed out US$17.3 m in dividends and bought back US$3.4 million of shares. 


The second graphic shows how Food Empire's capex has now tapered down following its investments in factories in Malaysia and India a few years ago.

In that light, and together with its cashpile and ongoing positive operating cashflow, Food Empire has the means to pay higher dividends and to continue to buy back shares.

That should be music to the ears of shareholders, and attract investors. 

Food Empire has frequently been buying back its shares.

As of 5 Sep 2023, Food Empire had 20.4 m treasury shares from its share buybacks executed over the years, notes CIMB.

capex cycle
williamtng4.14William Tng, CFACGS-CIMB's William Tng says: "Given the completion of major capex requirements, FY22 dividend payout and the use of its cash for share buy backs, we conservatively assume that FEH will continue with the trend of DPS of 4.40 Scts which it declared for FY22.

"FEH does not pay any interim dividend. FEH does not have an official dividend policy and special dividends could be a venue to return excess cash to shareholders if the company does not come across any attractive M&A opportunities."

return shareholders10.23

Full report here.

You may also be interested in:


You have no rights to post comments

Counter NameLastChange
AEM Holdings2.3600.010
Best World2.4700.010
Boustead Singapore0.9650.005
Broadway Ind0.1290.001
China Aviation Oil (S)0.9200.015
China Sunsine0.4150.005
ComfortDelGro1.5000.010
Delfi Limited0.9050.005
Food Empire1.2700.020
Fortress Minerals0.310-
Geo Energy Res0.310-
Hong Leong Finance2.490-0.010
Hongkong Land (USD)3.0700.040
InnoTek0.525-
ISDN Holdings0.3100.005
ISOTeam0.041-0.002
IX Biopharma0.043-
KSH Holdings0.250-
Leader Env0.0510.001
Ley Choon0.0460.003
Marco Polo Marine0.0660.001
Mermaid Maritime0.1410.003
Nordic Group0.340-
Oxley Holdings0.089-
REX International0.1370.001
Riverstone0.8200.020
Southern Alliance Mining0.4450.015
Straco Corp.0.5000.010
Sunpower Group0.2100.010
The Trendlines0.069-
Totm Technologies0.022-
Uni-Asia Group0.825-0.010
Wilmar Intl3.4800.030
Yangzijiang Shipbldg1.7800.060
 

We have 1278 guests and no members online

rss_2 NextInsight - Latest News