UOB Kay Hian Private Limited

Wednesday, 14 May 2025

Food Empire Holdings: Strong Q1 2025 Results Trigger Optimistic Outlook and Target Price Hike

Company Overview

Food Empire Holdings (FEH SP) is a manufacturer and marketer of a diverse range of food and beverage products, including instant beverages, frozen convenience foods, confectioneries, and snacks. The company’s products are exported to key markets such as Russia, Eastern Europe, Central Asia, the Middle East, and Indochina. [[1]]

Stock Details

• GICS Sector: Consumer Staples [[1]]
• Bloomberg Ticker: FEH SP [[1]]
• Shares Issued (m): 528.2 [[1]]
• Market Cap (S\$m): 808.1 [[1]]
• Market Cap (US\$m): 618.8 [[1]]
• 3-Month Average Daily Turnover (US\$m): 1.1 [[1]]
• 52-Week High/Low: S\$1.56/S\$0.95 [[1]]

Price Performance

• 1 Month: 22.4% [[1]]
• 3 Months: 58.5% [[1]]
• 6 Months: 50.0% [[1]]
• 1 Year: 34.2% [[1]]
• Year-to-Date (YTD): 54.5% [[1]]

Major Shareholders

• Anthoni Salim: 24.6% [[1]]
• Tan Wang Cheow: 22.5% [[1]]

Key Financial Data

• FY25 NAV/Share (US\$): 0.60 [[1]]
• FY25 Net Cash/Share (US\$): 0.21 [[1]]

Investment Thesis: A Robust Start to 2025

Food Empire Holdings (FEH SP) has demonstrated a strong start to 2025, prompting an upward revision of its target price. The company’s Q1 2025 revenue reached US\$137 million, marking a 16% year-over-year increase, slightly surpassing expectations and accounting for 27% of the full-year estimate. [[1], [2]] This growth was fueled by robust double-digit performance in the SEA, South Asia, and Ukraine, Kazakhstan and CIS segments. Notably, the SEA segment emerged as the top revenue contributor for the first time. [[2]]

FEH remains optimistic about its prospects and is confident that its strong brand equity will provide resilience against the direct impact of tariff wars. The recommendation is maintained at BUY, with a significantly increased target price of S\$1.98. [[2]]

1Q25 Results Breakdown

Here’s a detailed look at FEH’s 1Q25 performance:

• Southeast Asia (SEA): Sales surged by 34% year-on-year, driven primarily by a 45% increase in Vietnam sales. This growth is attributed to an enhanced sales force, effective marketing promotions and campaigns, and interactive consumer engagement activities. [[2], [3]]
• South Asia: Experienced a 32% year-on-year increase due to heightened demand for both freeze-dried and spray-dried soluble coffee. Facilities are operating at full capacity to meet this demand. [[3]]
• Ukraine, Kazakhstan, and CIS: Revenue rose by 15% year-on-year, led by a 29% increase in Kazakhstan, reflecting the contribution from Tea House LLP, which became a subsidiary in May 2024. Ukraine also posted a 10% increase in revenue. [[3]]

Strategic Initiatives and Outlook

• Brand Building: FEH is cautiously optimistic about sustaining strong revenue growth, driven by ongoing investments in brand building and its market leadership positions. [[4]]
• Asia Focus: The company’s strategic focus on Asia allows it to capitalize on high-growth emerging markets with an increasing preference for convenient, high-quality instant beverages. [[4]]

Key Financials and Forecasts (US\$m)

Stock Impacting Developments

• Vietnam Expansion: FEH plans to establish a freeze-dried soluble coffee manufacturing facility in Binh Dinh Province. Construction is expected to commence by the end of 2025 and be completed by 2028, positioning FEH as a leading soluble coffee manufacturer in Asia. [[6]]
• Malaysia Expansion: The expansion of its snack manufacturing facility in Malaysia is expected to be completed by the first half of 2025, increasing output capacity by approximately 50%. The newly expanded NDC manufacturing facility will also continue to increase production capacity utilization. [[6]]
• Kazakhstan Facility: The construction of FEH’s first coffee-mix manufacturing facility in Kazakhstan is expected to be completed by end-2025, boosting total coffee-mix production capacity by approximately 15% and expanding its reach in Central Asia. [[6]]

Earnings Forecasts

Earnings forecasts are maintained. [[6]]

Valuation and Recommendation

The recommendation is maintained at BUY with a 65% higher PE-based target price of S\$1.98 (previously S\$1.20). The revised target price is pegged to 15x 2025F PE, or 2SD above FEH’s long-term historical mean, aligning with the 2025F PE multiple of FEH’s regional peers. [[6]]

FEH is believed to be due for a rerating, driven by its track record of delivering robust results and easing tensions in Russia and Ukraine. Continued business growth is expected as FEH successfully manages pricing adjustments and strategically expands with its strong brand equity. [[7]]

Potential Catalysts

• Dividend surprise from robust financials. [[7]]
• Better-than-expected sales volumes across all business segments. [[7]]
• Improving net margin from higher ASPs and effective cost management. [[7]]

Peer Comparison

Financial Statements

Profit & Loss

Balance Sheet

Cash Flow

Key Metrics