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Food Empire to invest US$37 mil to expand capacity in India
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.
Food Empire&rsquo s strong growth ahead not fully appreciated: CGSI
Year to date, Food Empire Holdings has gained over 80% as at July 1, but William Tng of CGS International expects further upside to this stock.
As a consumer staples company whose main product is three-in-one instant coffee, Food Empire is poised for stronger earnings growth with the opening of various new production facilities.
Better known for selling coffee in Russia and other former Soviet Republics, Food Empire has built Vietnam as a new key market with strong growth and volume.
&ldquo We think investors have yet to get a good grip on the earnings potential of Food Empire as efforts to build on the growth momentum in Vietnam for its branded business is in progress,&rdquo states Tng in his June 26 note, where he kept his &ldquo add&rdquo call but with a higher target price of $2.28 from $1.95.
Vietnam has emerged as the company&rsquo s fastest-growing market, with revenue from its branded beverage business up 46% y-o-y in 1QFY2025, driven by a larger sales force, better marketing and reinforcing brand loyalty.
Another underappreciated growth driver, in Tng&rsquo s view, is Food Empire&rsquo s food ingredients manufacturing business. The expanded manufacturing facility in Johor will start production should in 3QFY2025. Its non-dairy creamer plant, also in Johor, is also seeing an increase in capacity and utilisation rate.
In Kazakhstan, the company is building its first three-in-one coffee-mix manufacturing facility, which will be completed by the end of FY2025. Tng says the new facility will boost Food Empire&rsquo s total coffee-mix production capacity by around 14%&ndash 15%, enabling it to grow its reach in Central Asia.
This plant, which can add an annual production capacity of 850 million sachets, is on top of the company&rsquo s existing combined capacity of six billion sachets from its plants in Russia, Ukraine, Malaysia and Vietnam.
According to Tng, Food Empire&rsquo s management expects a 10% net profit margin as a &ldquo reasonable&rdquo target, considering higher operating costs and depreciation.
Last September, the company also announced it would invest US$80 million in building a new Vietnam freeze-dried soluble coffee manufacturing facility by early 2028.
Tng figures that at full utilisation, this new plant could generate revenue of US$40 million ($51 million) to US$60 million per year from FY2028 to FY2030.
Given the company&rsquo s &ldquo supportive&rdquo fundamentals, Tng has raised his target valuation multiple from 11.2 times FY2026 earnings to 14.2 times FY2026 earnings, two standard deviations above its nine-year average, leading to the higher target price of $2.28.
Even at 14.2 times, Tng says that Food Empire is still trading at a 10.7% discount to the global sector average of 15.9 times P/E, which may reflect a valuation discount for its business in the Russia-Ukraine region, which has a low probability of suffering from risks of the ongoing fight.
Tng sees another &ldquo non-fundamental&rdquo re-rating catalyst. With a market cap of US$734 million and a three-month average daily traded value of US$0.8 million, Food Empire will be a &ldquo potential investible candidate&rdquo when the $5 billion market fund from the Monetary Authority of Singapore is deployed. &ldquo The additional demand boost would help raise Food Empire&rsquo s valuation, in our view,&rdquo says Tng.
In addition, Ikhlas Capital, an investor in the company through an issue of US$40 million worth of redeemable exchangeable notes (REN), could lead to a potential secondary listing in Malaysia or Hong Kong, which could improve valuation, says Tng.
Food Empire, having last announced a one-for-five bonus issue back in 2002, can consider another issue to reward shareholders, adds Tng.
Beyond the medium term, with the new contribution from new facilities in Vietnam coming on stream in FY2028, there is potential for Food Empire&rsquo s share price to reach $2.60 to $2.95, says Tng.
On July 1, Tng maintained his call and target price even after Food Empire entered into a second supplement agreement to address certain aspects of its REN with Ikhlas Capital.
Under the new agreement, Food Empire will seek to eliminate a potential revaluation gain or loss through an accounting classification known as &ldquo fixed-for-fixed&rdquo .
The new agreement will eliminate the non-cash impact on Food Empire&rsquo s reported earnings arising from fair value gains or losses due to the share exchange feature in the REN.
Pending the valuer&rsquo s report and the final review by Food Empire&rsquo s management and board, Food Empire has guided that it may report a fair value loss in its 1HFY2025 results. This is due to the &ldquo significant increase&rdquo in its share price above the exchange price from Jan 1 to the date of the signing of the supplemental agreement.
Tng estimates the loss to be around US$20 million, which is accounting in nature and would have no impact on Food Empire&rsquo s cash flow and actual earnings power.
Food Empire' s growth unappreciated, says CGSI&rsquo s Tng, whose new target price is $2.28
William Tng of CGS International has raised his target price for Food Empire Holdings from $1.95 to $2.28, as he believes that even with an 80% gain year to date, this counter, which as a consumer staples company is more resilient to current volatility, has further room for re-rating thanks to various catalysts some of which have are not quite fully appreciated by the market.
" We think investors have yet to get a good grip on the earnings potential of Food Empire as efforts to build on the growth momentum in Vietnam for its branded business is in progress.
" Food Empire has guided that the group will continue to invest in brand-building activities to keep up its growth momentum and further entrench its position in the instant coffee-mix space in Vietnam," states Tng in his June 26 note.
Vietnam has emerged as the company' s fastest-growing market, with revenue from its branded beverage business up 46% y-o-y in 1QFY2025, driven by a larger sales force, more effective marketing which reinforced brand loyalty.
Another underappreciated growth driver, in Tng' s view, is Food Empire' s food ingredients manufacturing business. By the end of 1HFY2025, its expansion of a manufacturing facility in Johor will be done and production to begin in 3QFY2025. Its non-dairy creamer plant, also in Johor, is also seeing an increase in both capacity and utilisation rate.
Elsewhere, the company is building its first 3-in-1 coffee-mix manufacturing facility in Kazakhstan to be completed by the end of FY2025. According to Tng, this new facility will boost Food Empire' s total coffee-mix production capacity by around 14-15% and enable it to grow its reach in Central Asia.
This plant, which can potentially add an annual production capacity of 850 million sachets, will be on top of the company' s existing combined capacity of six billion sachets from its plants in Russia, Ukraine, Malaysia and Vietnam.
According to Tng, citing the management, Food Empire expects a 10% net profit margin as a " reasonable" target, after taking into account factors such as higher operating costs and depreciation.
What makes Food Empire interesting is also its growth plans over the near to medium term. Last September, the company announced it is investing US$80 million to build a new Vietnam freeze-dried soluble coffee manufacturing facility by early 2028.
Tng figures that at full utilisation, this new plant could generate revenue of US$40 million to US$60 million per year over FY2028 to FY2030 depending on product specifications and coffee prices then.
Given the company' s " supportive" fundamentals, Tng has raised his target valuation multiple from 11.2x FY2026, to 14.2x FY2026, which is 2 sd above its 9-year average, leading to the higher target price of $2.28.
Even at 14.2x, Tng says that Food Empire is still trading at a 10.7% discount to the global sector average of 15.9x PE, which may reflect a valuation discount for its business in the Russia-Ukraine region which has a low probability of suffering from risks of the ongoing fight.
Tng sees another " non-fundamental" re-rating catalyst. With a market cap of US$734 million and three-month average daily traded value of US$0.8 million, Food Empire will be a " potential investible candidate" when the $5 billion market fund from the Monetary Authority of Singapore is deployed. " The additional demand boost would help raise Food Empire&rsquo s valuation, in our view," says Tng.
In addition, with Ikhlas Capital, an investor in the company via an issue of US$40 million worth of redeemable exchangeable notes, can lead to a potential secondary listing in Malaysia, or Hong Kong, possibly improving valuation, says Tng.
Individuals behind Ikhlas Capital include Nazir Razak, former CIMB chairman and before that, group CEO, and Gita Wirjawan, Indonesia&rsquo s Minister of Trade from 2011 to 2014.
Food Empire, having last announced a 1 for 5 bonus issue back in 2002, can consider another issue to reward shareholders, adds Tng.
Beyond the medium term, with the new contribution from new facilities in Vietnam coming on stream in FY2028 onwards, there' s potential for Food Empire' s share price to reach $2.60 to $2.95, says Tng.
Citing Food Empire' s strong growth and new capacity, KGI maintains ' buy' and $1.95 target price
KGI Securities has kept its " buy" call and $1.95 target price on Food Empire Holdingsafter it recorded continued strong growth across its various markets, especially southeast and south Asia.
In particular, thanks to brand-building efforts, it was able to generate 44.6% y-o-y jump in its 1QFY2025 revenue in Vietnam.
" This has significantly boosted Food Empire&rsquo s Southeast Asia revenue contribution, taking the top spot and contributing to 29.2% of the group&rsquo s total sales in 1Q25," says KGI in its May 26 note.
" Demand for the group&rsquo s products in South Asia also remains strong amidst a coffee consumption boom in the region," adds KGI.
To meet growing demand, the company is " significantly" expanding its production capabilities across Asia, with a new freeze-dried soluble coffee facility is set to begin construction by late 2025 and become operational by 2028.
In addition, its Malaysian snack manufacturing facility will increase output by about 50% by the third quarter of 2025 after an expansion is completed in the first half. Outside Southeast Asia, Food Empire&rsquo s first coffee-mix plant in Kazakhstan is expected to be finished by the end of 2025, boosting overall coffee-mix capacity by approximately 15% and extending its reach into Central Asia.
" These strategic expansions are set to drive continued top-line growth across its key Asian markets," says KGI.
Food Empire&rsquo s target prices raised on robust 1Q
Food Empire Holdings (FEH) on May 13 announced its 1QFY2025 ended March 31 business update, which saw revenue increase by 16.3% y-o-y. This was also the first quarter that the company&rsquo s Southeast Asia segment surpassed its Russia segment, which has traditionally been the group&rsquo s largest revenue generator, for the first time, with a 33.8% y-o-y increase in revenue since 1QFY2024.
This is due to strong sales of its branded consumer products in Vietnam, which the group says is its fastest-growing market.
Revenue from Vietnam surged 44.6% in 1QFY2025, driven by an enhanced sales force, effective marketing promotions and campaigns, and interactive consumer engagement activities that reinforced brand loyalty and increased new customer acquisition.
Analysts&rsquo sentiment on FEH has turned more positive with research houses keeping their &ldquo buy&rdquo recommendations, while increasing their target prices.
Maybank Securities has previously increased its target price on FEH to $2.00 from $1.19.
Analyst Jarick Seet notes that 1QFY2025 revenue had beaten expectations. More importantly, Southeast Asia revenue now exceeds Russia&rsquo s, validating the group&rsquo s revenue diversification strategy.
&ldquo Going forward, we expect margins to improve as price increase adjustments kick in. Growth in Asia is expected to be strong, supported by a robust pipeline of capacity expansion projects currently being carried out in the region,&rdquo says Seet.
He expects Asia to be the largest growth driver for FEH, with the group completing its construction of a freeze-dried soluble coffee manufacturing facility in Vietnam by 2028. This will position it as a leading manufacturer of soluble coffee in Asia.
In Malaysia, its snack manufacturing facility will be expanded by 1H2025, while commercial output will expand capacity by 50% by 3Q2025. The newly expanded non-dairy creamer manufacturing facility will continue increasing production capacity utilisation. Finally, the construction of its first coffee-mix manufacturing facility in Kazakhstan will be completed by the end of 2025.
&ldquo Historically, Russia was FEH&rsquo s largest revenue and profit driver, leading to a valuation discount against 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 rerating with a lower discount to its peers,&rdquo says Seet.
Similarly, UOB Kay Hian has maintained its &ldquo buy&rdquo call, increasing its target price to $1.98 from $1.20.
Analysts John Cheong and Heidi Mo also note that revenue came in slightly above expectations, forming 27% of their full-year estimate.
The analysts remain cautiously optimistic about sustaining strong revenue growth because of ongoing investments in brand building and the market leadership positions of FEH&rsquo s brands.
FEH&rsquo s past investments have borne fruit and its robust expansion pipeline positions it strongly for its next growth phase. FEH&rsquo s strategic focus on Asia allows it to capitalise on high-growth emerging markets that increasingly prefer good-quality instant beverages that provide convenience and cater to busy lifestyles.
&ldquo We believe FEH is due for a rerating thanks to its increasingly better track record in delivering robust results and easing tensions in Russia and Ukraine, two key segments of FEH. We opine that FEH will continue to see business growth as it successfully passes on pricing adjustments and embarks on strategic expansion with its strong brand equity,&rdquo say Cheong and Mo.
&ldquo FEH maintains an optimistic outlook and is confident that its strong brand equity will provide resilience against the direct impact of the tariff wars,&rdquo they add.
On the other hand, CGS International has kept its &ldquo add&rdquo call, while increasing its target price on FEH to $1.95 from $1.71.
Analyst William Tng also notes that revenue came in above expectations. He also notes that management is cautiously optimistic about sustaining its topline performance ahead of time because of ongoing investments in brand building and the market leadership position of its brands.
Management guided that it does not expect FEH to be significantly affected by the US&rsquo s new tariff regime, as the US is not a major market for the group. For FY2025, management guided that revenue will be aided by the expansion of its snack manufacturing facility by 1HFY12025, with production by 3QFY2025 and a higher utilisation rate for the expanded non-diary creamer plant.
The construction of its coffee-mix manufacturing facility in Kazakhstan is expected to be completed by the end of FY2025. Management expects the plant to boost the group&rsquo s total coffee-mix production capacity by approximately 15%.
&ldquo We believe FEH&rsquo s earnings will remain resilient in the current uncertain environment as its branded products are attractively priced consumer staples,&rdquo says Tng, expecting P/E to trend upwards to 13.4 times, as the group continues to grow its net profit.
Hovering near day high of $1.69.
If there are enough shorts, it may cross $1.70 later on short coverings.
Let' s see
If there are enough shorts, it may cross $1.70 later on short coverings.
Let' s see
Food Empire get boost in target prices following bright 1Q results
Samantha ChiewWed, May 14, 2025 &bull 11:38 AM GMT+08 &bull &bull 4 min read
FY2025 is a year of growth for Food Empire. Photo: Albert Chua/ The Edge SingaporFood Empire Holdings (FEH) on May 13 announced its 1QFY2025 ended Mar 31 business update which saw revenue increase by 16.3% y-o-y. This was also the first quarter that the company&rsquo s Southeast Asia (SEA) segment surpassed its Russia segment which has traditionally been the group&rsquo s largest revenue generator for the first time, with a 33.8% y-o-y increase in revenue since 1QFY2024.
This is due to strong sales of its branded consumer products in Vietnam, which the group says is its fastest growing market.
Revenue from Vietnam surged 44.6% this quarter, driven by the combination of an enhanced sales force, effective marketing promotions and campaigns, as well as interactive consumer engagement activities that reinforced brand loyalty and increased new customer acquisition.
Analysts&rsquo sentiment on FEH has turned more positive with research houses keeping their &ldquo buy&rdquo recommendations, while increasing their target prices.
Maybank Securities has increased its target price on FEH to $2.00 from $1.19 previouslyn Mor
Analyst Jarick Seet notes that 1QFY2025 revenue had beat expectations and more importantly, SEA revenue now exceeds that of Russia, validating the group&rsquo s revenue diversification strategy.
we Going forward, weexpect margins to improve as price increase adjustments kick in. Growth in Asia is expected to be strong, supported by a robust pipeline of capacity expansion projects that are currently being carried out in the region,&rdquo says Seet.
He expects Asia to be the largest growth driver for FEH, with the group completing its construction of a freeze-dried soluble coffee manufacturing facility in Vietnam by 2028. This will position it as a leading manufacturer of soluble coffee in Asia.
In Malaysia, the expansion of its snack manufacturing facility by be completed in 1H2025 while commercial output will expand capacity by 50% by 3Q2025. The newly expanded non-dairy creamier manufacturing facility will also continue to increase production capacity utilisation. Finally, the construction of its first coffee-mix manufacturing facility in Kazakhstan will be completed by end-2025.
&ldquo Historically, Russia was FEH&rsquo s largest revenue and profit driver and this led to a valuation discount against 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,&rdquo says Seet.
Similarly, UOB Kay Hian has maintained its &ldquo buy&rdquo call, while increasing its target price to $1.98 from $1.20 previously.
Analysts John Cheong and Heidi Mo also note that revenue came in slightly above expectations, forming 27% of their full-year estimate.
The analysts remain cautiously optimistic about sustaining strong revenue growth, because of ongoing investments in brand building as well as the market leadership positions of FEH&rsquo s brands.
FEH&rsquo s past investments have borne fruits and its robust expansion pipeline positions it strongly for its next phase of growth. FEH&rsquo s strategic focus on Asia allows it to capitalise on high-growth emerging markets that have shown an increasing preference for good quality instant beverages that provide convenience and cater to busy lifestyles.
&ldquo We believe FEH is due for a rerating thanks to its increasingly better track record in delivering robust results and easing tensions in Russia and Ukraine, two key segments of FEH. We opine that FEH will continue to see business growth as it successfully passes on pricing adjustments and embarks on strategic expansion with its strong brand equity,&rdquo say Cheong and Mo.
&ldquo FEH maintains an optimistic outlook and is confident that its strong brand equity will provide resilience against the direct impact of the tariff wars,&rdquo they add.
CGS International on the other hand has kept its &ldquo add&rdquo call, while increasing its target price on FEH to $1.95 from $1.71 previously.
Analyst William Tng too notes that revenue came in above expectations. He also notes that management is cautiously optimistic of sustaining its topline performance ahead because of ongoing investments in brand building and the market leadership position of its brands.
Management guided that it does not expect FEH to be significantly affected by the US&rsquo s new tariff regime, as the US is not a major market for the group. For FY2025, management guided that revenue will be aided by the expansion of its snack manufacturing facility by 1HFY12025, with production by 3QFY2025 and higher utilisation rate for the expanded non-diary creamer plant.
The construction of its coffee-mix manufacturing facility in Kazakhstan is expected to be completed by end-FY2025 and management expects the plant to boost the group&rsquo s total coffee-mix production capacity by approximately 15%.
&ldquo We believe FEH&rsquo s earnings will remain resilient in the current uncertain environment as its branded products are attractively priced consumer staples,&rdquo says Tng, while expecting P/E to trend upwards to 13.4x, as the group continues to grow its net profit.
As at 11.30am, shares in FEH are trading 9.15% higher at $1.67.
Food Empire reports 16.3% rise in revenue for Q1
The group&rsquo s South-east Asia segment has leapfrogged Russia to emerge as its best-performing market with US$40 million in sales, up 33.8% year on year.
[SINGAPORE] Food Empire : F03 +1.32% posted a 16.3 per cent rise in its top line to US$136.6 million for the first quarter of FY2025 ended March, as most major markets delivered better performance.
However, the firm did not give its net profit for the period in the update filed with the bourse on Tuesday (May 13).
Contributing to the better performance was its dynamic pricing approach to cushion against inflationary pressures, rising operating costs and surging coffee bean prices, Food Empire said.
Vietnam stood out as revenue from the South-east Asian nation surged 44.6 per cent, driven by an enhanced sales force, effective marketing, as well as interactive consumer engagement activities that reinforced brand loyalty, it added.
Vietnam helped Food Empire&rsquo s South-east Asia market to leapfrog Russia &ndash its traditional top revenue market &ndash and emerge as its best-performing market with US$40 million in sales, up 33.8 per cent year on year.
Calling this an inflexion point in the group&rsquo s Asia-centric strategy, chief executive Sudeep Nair expects the group&rsquo s performance in Asia to be driven by its strong brand positions and supported by the pipeline of capacity expansion projects currently being carried out in the region.
Construction of a freeze-dried soluble coffee manufacturing facility in Binh Dinh Province, Vietnam, is expected to commence by the end of 2025 and be completed by 2028.
Commercial output from the new snack manufacturing facility in Malaysia will be ready in the third quarter, which will expand output capacity by approximately 50 per cent.
Construction of its first coffee-mix manufacturing facility in Kazakhstan is projected to be completed by end-2025 and will boost the group&rsquo s total coffee-mix production capacity by approximately 15 per cent.
In spite of the tariff turmoil, Food Empire does not expect any major impact because the US is not a significant market for the group.
RHB raises target price for Food Empire to $1.67 on steady sales growth and capacity expansion
Alfie Yeo of RHB Bank Singapore has kept his " buy" on Food Empire Holdings along with a raised target price of $1.67 from $1.23 previously, on optimism over the coffee and snack maker' s longer-term growth prospects underpinned by expanding capacity.
In the meantime, Food Empire, with its domestic-focused businesses, is seen to have " minimal" exposure from the impact of the US tariffs.
" We raise FY2025 to FY2026 earnings on better revenue traction, including higher operating costs," says Yeo in his April 24 note.
His revised target price of $1.67 is based on 12x FY2025 earnings, which is still below 15x accorded to regional peers. His previous valuation multiple was 9x earnings.
According to Yeo, Food Empire' s growth in the medium term will be driven by more production facilities which will boost sales volume.
For example, Malaysia' s snack production capacity is set to expand by 1HFY2025. Its first new coffee-mix factory in Kazakhstan is scheduled to open by FY2025.
It will also increase its production capacity for coffee mixes by 15%. Finally, a new freeze-dried soluble coffee manufacturing facility in Vietnam has been planned to open by FY2028.
" With medium-term growth drivers intact, Food Empire is well positioned for longer-term growth," says Yeo.
" Growth momentum remains strong and revenue continues to be driven by strong demand and sell through existing markets," he adds.
Yeo notes that in FY2024, Food Empire was able to continue to chalk up better sales in its various markets, including Russia, which enjoyed a 7.3% growth in sales in local currency terms in FY2024 but just down -1.1% y-o-y when reported in Singdollar.
On the back of strong revenue traction and sell through, Yeo says he now has a more positive revenue forecast.
" We have reduced our margin assumptions to reflect the current cost run rate due to higher coffee prices. We can expect Food Empire to pass through the higher input costs to customers eventually," says Yeo, who has raised his FY2025 earnings estimate by 8% and that for FY2026 by 7%.
For Yeo, downside risks to his forecasts include a disruption in operations due to the Russia-Ukraine conflict, and the negative effect of a change in the value of the ruble and other currencies of the former Soviet states.
Food Empire receives US$10 mil loan to build new manufacturing facility in Kazakhstan
Food Empire has secured a US$10 million ($13.35 million) loan from the European Bank for Reconstruction and Development (EBRD) for the construction of its new coffee-mix manufacturing facility in Kazakhstan.
The facility is located within the Khorgos Special Economic Zone (SEZ) in Kazakhstan, and it is Food Empire&rsquo s first manufacturing facility in the country.
The facility will produce the group&rsquo s portfolio of instant beverage products including its flagship MacCoffee brand of instant coffee-mix. Food Empire expects to export up to 50% of the products manufactured at the new facility to Central Asia and the Caucasus.
Meanwhile, the EBRB said that it expects the new facility to create jobs and set a new benchmark for the food-processing sector in Kazakhstan and Central Asia in terms of technology and hygiene standards.
The EBRB has invested more than &euro 11 billion in 335 projects in Kazakhstan, with most of the funds supporting private entrepreneurship.
$1.25 now
Lightyear ( Date: 07-Mar-2025 10:04) Posted:
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Up from 0.98 to 1.21 in a week, wow
Food Empire H2 profit down 3.2% at US$28.9 million
This is despite revenue growing 10.4% to US$251.1 million for the period
FOOD Empire&rsquo s net profit fell 3.2 per cent to US$28.9 million for the second half ended Dec 31, 2024, from US$29.8 million in the same period the year before.
Meanwhile, its revenue rose 10.4 per cent to US$251.1 million from US$227.5 million, the food and beverage company said on Tuesday (Feb 25).
The group proposed a dividend per share of S$0.08, comprising a final dividend of S$0.06 and a special dividend of S$0.02.
Excluding special dividends, this is the third consecutive year of dividend increases, Food Empire noted.
Earnings per share for H2 stood at US$0.0549, down from US$0.0567.
For the full year, the company reported a net profit of US$52.5 million, down 7 per cent from US$56.5 million. Revenue came in at US$476.3 million, up 11.9 per cent from US$425.7 million.
FY2024 marks Food Empire&rsquo s fourth consecutive year of revenue growth amid geopolitical challenges, group chief executive officer Sudeep Nair said.
The group also cited its diversification strategy and focus on the fast-growing Asia region. Its revenue was boosted by double-digit growth in its South-east Asia, South Asia, as well as Ukraine, Kazakhstan and Commonwealth of Independent States segments.
However, the gain was partially offset by a slight dip in its Russia segment, due to the depreciation of the Russian ruble against the US dollar.
As part of its regional expansion strategy, the company has invested in new production facilities in Asia, including a coffee-mix production facility in Kazakhstan that will be constructed by the end of 2025.
This will be Food Empire&rsquo s first such facility in Central Asia, and it will enable the group to serve markets in that region more efficiently, it said.
While it is &ldquo cautiously optimistic&rdquo about sustained business growth, it is also mindful of macroeconomic factors such as geopolitical challenges and heightened trade tensions that may cause currency volatility, it said.
It also noted that climate change has driven up the cost of its main raw material, coffee beans.
&ldquo The group remains vigilant of any potential impact that these events may have on its business, and will continue to conduct periodic reviews and manage its business strategies to mitigate these challenges,&rdquo it added.
Food Empire marks 4th consecutive year of topline growth FY2024 revenue hits new record of US$476.3 million
The South-East Asia segment has become the Group&rsquo s second largest revenue contributor
The Board proposes a total dividend of 8.0 Singapore cents per ordinary share comprising a first and final dividend of 6.0 Singapore cents and special dividend of 2.0 Singapore cents
This is the third consecutive year of increase in dividends (excluding special dividends)
Food Empire remains optmistc about its growth prospects with ongoing product innovaton and brand building efforts across markets, and capacity expansion projects in the pipeline
The South-East Asia segment has become the Group&rsquo s second largest revenue contributor
The Board proposes a total dividend of 8.0 Singapore cents per ordinary share comprising a first and final dividend of 6.0 Singapore cents and special dividend of 2.0 Singapore cents
This is the third consecutive year of increase in dividends (excluding special dividends)
Food Empire remains optmistc about its growth prospects with ongoing product innovaton and brand building efforts across markets, and capacity expansion projects in the pipeline
The full year financial report should be out soon.
Last year full year report was out on 27 Feb 2024.
Last year full year report was out on 27 Feb 2024.
Ruble Hits 6-Month High Amid U.S.-Russia Rapprochement - The Moscow Times
The ruble has gained about 14% since U.S. President Donald Trump returned to the White House in January, reversing losses from late 2024.
The ruble has gained about 14% since U.S. President Donald Trump returned to the White House in January, reversing losses from late 2024.
Trump and Putin set to meet in Saudi Arabia on Ukraine. This should be good news for Food Empire.
&lsquo Hold&rsquo onto Food Empire as it sets the stage for diversification
UOB Kay Hian is keeping its &ldquo hold&rdquo recommendation on Food Empire Holdings but with a higher target price of $1.10 from $1.00 previously.
In its Jan 20 report, analysts John Cheong and Heidi Mo are upbeat on the group&rsquo s upcoming 2HFY2024 ended December 2024 earnings release on Feb 26 after trading hours. &ldquo We are expecting 2HFY2024 net profit at US$22 million &ndash US$23 million (vs 1HFY2024: US$24 million, 2HFY2023: US$30 million). This will bring full-year net profit to US$46 million &ndash US$47 million.&rdquo
While revenue is expected to see growth on strong demand and increased marketing efforts, particularly from the Southeast Asia segment, the analysts believe that margins are likely to take a hit from currency devaluation and rising coffee prices.
Meanwhile, Food Empire has invested US$80 million into a new freeze-dried coffee manufacturing facility in Binh Dinh, Vietnam, located near coffee-growing regions and funded by both borrowings and internal resources.
This strategically positions the company to leverage low production costs, access quality coffee beans and tap into the growing Southeast Asian coffee market. The group&rsquo s second coffee facility will commence construction in 1Q2025, and is expected to be completed by early-2028.
&ldquo We think that this vertical expansion will grow its ingredients business and strengthen the company&rsquo s presence in the rapidly growing Southeast Asian market, while effectively diversifying away from Russia,&rdquo say the analysts.
In May 2024, the group had also revealed plans to establish its first coffee-mix production facility in Kazakhstan, with an expected completion by end-2025. Once operational, the facility will produce coffee-mix sachets under the group&rsquo s various brands, including the flagship MacCoffee brand, which is sold in over 60 countries.
In Aug 2024, it also formed a strategic partnership with Ikhlas Capital to support the growth of its business segments in Southeast Asia and South Asia. Both the Southeast Asia and Ukraine, Kazakhstan and CIS segments marked strong double-digit y-o-y revenue growth, and the analysts think that Food Empire is effectively focusing on these markets to expand further.
While things look rosy on the growth front, near-term gross margins are expected to remain subdued.
Coffee prices have rallied to record highs, underpinned by reduced output due to poor weather in Brazil and Vietnam. Supply chain disruptions like the Red Sea crisis and the EU Deforestation Regulation (EUDR) have also led to price increases in 2024. Moving into 2025, as the EUDR has been postponed, demand is expected to subside while supply may improve on higher rainfall.
The analysts also see potential downside to currency translation amid exchange rate volatility, especially from Russia, Ukraine and Vietnam, as the currencies depreciate against the USD.
Finally beginning to come alive. Drink more coffee please.
CGSI ups Food Empire&rsquo s TP to $1.53 with Vietnam &lsquo likely to shine&rsquo in FY2024 results
CGS International analyst William Tng has kept his &ldquo add&rdquo call on Food Empire with a higher target price estimate of $1.53 from $1.43 previously. Tng&rsquo s new target price comes days after he resumed coverage on the counter with a lowered target price of $1.43.
In his Jan 16 report, Tng says he attended the official opening of Food Empire&rsquo s new office at Asia Green and discusses the company&rsquo s upcoming FY2024 ended Dec 31, 2024. The analyst believes the company&rsquo s FY2024 revenue may grow by 5.8% y-o-y to US$450.5 million ($616.5 million) although its net profit for the year may decline by 18.5% y-o-y to US$46.1 million due to foreign exchange (forex) impact, higher coffee prices and an increase in spending in Vietnam.
To this end, Tng believes Vietnam is &ldquo likely to shine&rdquo in Food Empire&rsquo s FY2024 results with the company identifying the Southeast Asian nation as a key growth market.
&ldquo We expect Food Empire to provide further updates on its plan for Vietnam when FY2024 results are released. We note that for 9MFY2024, Southeast Asia/South Asia were the fastest growing segments for Food Empire, with revenue growing 30.6% y-o-y/28.3% y-o-y, respectively, amid strong growth in Vietnam,&rdquo he writes.
As such, the analyst is expecting to see higher revenue from Food Empire&rsquo s Southeast Asia market in FY2024, which confirms the company&rsquo s success in reducing its dependency on its biggest market, Russia.
With Food Empire&rsquo s intention to grow its food ingredients business and operations in Vietnam, Tng expects the company to declare an ordinary dividend per share (DPS) of 5 cents as his base case scenario, or 5.34 cents otherwise. The analyst, however, does not expect any special dividend as he thinks the company intends to conserve cash for growth.
Tng&rsquo s higher target price comes after rolling over his valuation for FY2026 based on an unchanged P/E multiple of 11.2 times and 1 standard deviation (s.d.) over the company&rsquo s five-year mean from FY2019 to FY2023.
Food Empire is expected to release its FY2024 results on Feb 26.