Food Empire is on a roll. After UOB KH's report (), Maybank had a report out as well (see below). Both basically say that 1Q2023 results to be released this Friday will be positive. 

Excerpts from Maybank KE report

Analysts: Jarick Seet & Eric Ong

Food Empire Holdings (FEH SP): A good start to the year

Maintain BUY with an unchanged TP of SGD1.29

FEH will report 1Q23 earnings on 12 May 2023 after market hours and we expect revenue of USD86.7m (+5% YoY) and NPAT of USD11.2m (+22% YoY).

Food Empire

Share price: 


This should be driven by strong demand, especially in its core markets of Russia and Vietnam.

Corporate share buy-backs have also been consistent and will likely resume after the blackout period given it has just renewed its mandate.

With a positive 1Q23E ahead and an undemanding valuation, we maintain BUY on an unchanged TP of SGD1.29, based on 11x FY23E P/E.

maccoffee girl.AR12 

1Q23E should show strong NPAT growth  


SudeepNair phoneSudeep Nair, CEO. Photo: annual report 2022We expect 1Q23E to show further strong NPAT growth of 22% YoY to USD11.2m, especially given that the Russia/Ukraine war started in 1Q22 and hurt its operations.

We expect demand to remain strong in Russia and the CIS region and strong growth from Vietnam.

Spray dry and new freeze dry coffee plants in India continue to operate at full capacity but should yield higher margins due to cost reductions on freight cost normalisation.

Share buybacks to resume after blackout 


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.”

-- Maybank KE

FEH has also been undertaking share-buybacks in the open market, buying at higher prices than ever before (>SGD1.01) and we expect this to continue as management concur that the company is deeply undervalued and remains confident of its 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.


 Fundamentals still strong and valuations attractive


Tan Wang Cheow phTan Wang Cheow executive chairman. Photo: Annual report 2022FEH is trading at 8.6x core FY23E P/E, still a steep discount despite its strong recent share price performance versus the valuations of its private and listed 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.

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