UOB Kay Hian Private Limited
Wednesday, 14 May 2025
Food Empire Holdings: Strong Q1 2025 Results Trigger Optimistic Outlook and Target Price Surge
Company Overview
Food Empire Holdings (FEH SP) is a Singapore-based company [[1]] specializing in the manufacture and marketing of a diverse range of food and beverage products. Their portfolio includes:
- Instant beverage products
- Frozen convenience food
- Confectioneries
- Snacks
The company has a significant international presence, exporting its products to key markets like Russia, Eastern Europe, Central Asia, the Middle East, and Indochina. [[1]]
Stock Information
- 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-mth Avg 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 Strong Start and Optimistic Outlook
Food Empire Holdings (FEH SP) reported a robust first quarter for 2025, exceeding expectations and prompting analysts to raise the target price significantly. The company’s revenue for 1Q25 reached US\$137 million, a 16% year-over-year increase, surpassing initial estimates and accounting for 27% of the full-year projection. [[1], [2]]
The growth was fueled by strong double-digit performance across several key regions, including Southeast Asia (SEA), South Asia, and Ukraine, Kazakhstan & CIS. Notably, the SEA segment emerged as the top revenue contributor for the first time. [[2]]
Management maintains a positive outlook, expressing confidence in the company’s brand equity to withstand potential adverse effects from tariff wars. The recommendation is to Maintain BUY with a 65% higher target price of S\$1.98. [[2]]
1Q25 Results Breakdown
The following table summarizes FEH’s revenue performance by region:
| Year to 31 Dec (US\$m) |
1Q25 |
1Q24 |
yoy % chg |
| Total Revenue |
136.6 |
117.5 |
16.3 |
| – Southeast Asia (SEA) |
40.0 |
29.9 |
33.8 |
| – Russia |
39.4 |
39.2 |
0.5 |
| – Ukraine, Kazakhstan and CIS |
33.9 |
29.5 |
14.9 |
| – South Asia |
19.1 |
14.5 |
31.7 |
| – Others |
4.2 |
4.4 |
(4.5) |
The SEA segment’s rise to the top was largely driven by a 45% surge in sales from Vietnam in 1Q25. [[2], [3]]
Factors Driving Growth
- SEA Expansion: Vietnam’s impressive sales growth was attributed to an enhanced sales force, effective marketing promotions, and interactive consumer engagement activities. [[3]]
- South Asia Demand: Increased demand for both freeze-dried and spray-dried soluble coffee led to facilities operating at full capacity. [[3]]
- CIS Performance: Revenue growth in Ukraine, Kazakhstan, and CIS was primarily driven by Kazakhstan, with a 29% increase reflecting contributions from Tea House LLP, which became a subsidiary in May 2024. Ukraine also saw a 10% revenue increase. [[3], [4]]
FEH has proactively adopted dynamic pricing strategies to mitigate the impact of inflationary pressures, rising operating costs, and increasing coffee bean prices. [[3]]
The company is optimistic about sustaining strong revenue growth through ongoing investments in brand building and leveraging the market leadership positions of its brands. FEH’s strategic focus on Asia allows it to capitalize on high-growth emerging markets. [[4]]
Key Financials and Forecasts
The following table presents key financial data and forecasts for Food Empire Holdings:
| Year to 31 Dec (US\$m) |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net turnover |
426 |
476 |
505 |
536 |
567 |
| EBITDA |
79 |
72 |
75 |
80 |
85 |
| Operating profit |
71 |
63 |
65 |
70 |
75 |
| Net profit (rep./act.) |
57 |
53 |
54 |
58 |
62 |
| Net profit (adj.) |
57 |
50 |
54 |
58 |
62 |
| EPS (US\$ cent) |
10.8 |
9.4 |
10.3 |
11.0 |
11.8 |
| PE (x) |
10.9 |
12.4 |
11.4 |
10.6 |
9.9 |
| P/B (x) |
2.1 |
2.1 |
1.9 |
1.8 |
1.6 |
| EV/EBITDA (x) |
6.4 |
7.1 |
6.8 |
6.4 |
6.0 |
| Dividend yield (%) |
6.3 |
5.0 |
5.0 |
5.0 |
5.0 |
| Net margin (%) |
13.3 |
11.0 |
10.7 |
10.8 |
10.9 |
| Net debt/(cash) to equity (%) |
(32.1) |
(31.1) |
(35.1) |
(38.9) |
(42.8) |
| Interest cover (x) |
n.a. |
273.8 |
254.9 |
287.2 |
317.9 |
| ROE (%) |
19.7 |
17.8 |
17.7 |
17.6 |
17.2 |
| Consensus net profit |
– |
– |
54 |
58 |
62 |
| UOBKH/Consensus (x) |
– |
– |
1.00 |
1.00 |
0.99 |
Strategic Initiatives and Expansion Plans
- Vietnam Expansion: Food Empire is committed to investing in brand-building activities in Vietnam to maintain growth and strengthen its market leadership in the instant coffee-mix segment. A new freeze-dried soluble coffee manufacturing facility is planned for Binh Dinh Province, with construction expected to begin by the end of 2025 and be completed by 2028. [[5]]
- Malaysia Expansion: The expansion of the snack manufacturing facility in Malaysia is slated for completion by the first half of 2025, with commercial output expected in the third quarter, increasing output capacity by approximately 50%. The expanded NDC manufacturing facility will also continue to ramp up production capacity utilization. [[5]]
- Kazakhstan Facility: The construction of FEH’s first coffee-mix manufacturing facility in Kazakhstan is expected to be completed by the end of 2025. This new facility will increase the company’s total coffee-mix production capacity by around 15% and facilitate expansion in Central Asia. [[5]]
Earnings Forecasts and Valuation
Earnings forecasts are maintained. The target price is raised to S\$1.98, based on a PE ratio of 15x 2025F PE, which is 2SD above FEH’s long-term historical mean. This aligns with the 2025F PE multiple of FEH’s regional peers. [[5], [6]]
Analysts believe FEH is poised for a rerating due to its consistent delivery of strong results and the stabilization of tensions in Russia and Ukraine, which are key markets for the company. It’s expected that FEH will sustain business growth through effective pricing adjustments and strategic expansion, supported by its strong brand equity. [[6]]
Potential Catalysts
- Dividend surprises stemming from robust financials. [[6]]
- Better-than-expected sales volumes across all business segments. [[6]]
- Improving net margin driven by higher average selling prices (ASPs) and effective cost management. [[6]]
Peer Comparison
The following table compares Food Empire Holdings with its regional peers:
| Company |
Ticker |
Curr |
Trading Price @ 13 May 25 |
Market Cap (US\$m) |
PE 2024 (x) |
PE 2025 (x) |
PE 2026 (x) |
P/B 2025 (x) |
Yield 2025 (%) |
Net Gearing (%) |
| Food Empire |
FEH SP |
SGD |
1.53 |
619 |
12.4 |
11.4 |
10.6 |
1.9 |
5.0 |
(35.1) |
| Thai Beverage |
THBEV SP |
SGD |
0.495 |
9,526 |
11.7 |
10.8 |
10.0 |
1.9 |
5.4 |
81.8 |
| Fraser And Neave |
FNN SP |
SGD |
1.25 |
1,394 |
12.1 |
n.a. |
n.a. |
n.a. |
n.a. |
(9.1) |
| Delfi |
DELFI SP |
SGD |
0.73 |
342 |
10.1 |
8.8 |
8.4 |
1.2 |
7.1 |
(5.7) |
| Yeo Hiap Seng |
YHS SP |
SGD |
0.565 |
270 |
50.9 |
n.a. |
n.a. |
n.a. |
n.a. |
(17.4) |
| Average (Excl. YHS SP) |
|
|
|
|
11.3 |
9.8 |
9.2 |
1.5 |
6.2 |
|
| Nestle (Malaysia) |
NESZ MK |
MYR |
85 |
4,615 |
48.0 |
41.7 |
37.7 |
34.5 |
2.3 |
189.8 |
| Fraser & Neave |
FNH MK |
MYR |
26.9 |
2,284 |
18.2 |
17.3 |
16.4 |
2.5 |
2.8 |
(5.8) |
| Coca-Cola Conso |
COKE US |
USD |
1175.34 |
10,246 |
16.8 |
n.a. |
n.a. |
n.a. |
n.a. |
27.4 |
| Dydo Group |
2590 JP |
JPY |
2904 |
650 |
24.1 |
26.9 |
22.9 |
1.0 |
1.0 |
(5.1) |
| Power Root |
PWRT MK |
MYR |
1.43 |
140 |
18.8 |
16.8 |
14.9 |
2.8 |
5.0 |
(8.6) |
| Tac Consumer |
TACC TB |
THB |
4.6 |
83 |
11.2 |
9.9 |
9.1 |
3.5 |
9.7 |
(22.1) |
| Average (Excl. NESZ MK & 2590 JP) |
|
|
|
|
16.2 |
14.7 |
13.5 |
3.0 |
5.8 |
|
Financial Statements
Profit & Loss
| Year to 31 Dec (US\$m) |
2024 |
2025F |
2026F |
2027F |
| Net turnover |
476.3 |
504.7 |
536.2 |
566.7 |
| EBITDA |
72.3 |
75.2 |
80.0 |
84.7 |
| Deprec. & amort. |
9.0 |
10.2 |
10.0 |
9.8 |
| EBIT |
63.3 |
65.0 |
70.0 |
74.9 |
| Total other non-operating income |
2.7 |
2.7 |
2.7 |
2.7 |
| Associate contributions |
(0.5) |
0.6 |
0.6 |
0.6 |
| Net interest income/(expense) |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
| Pre-tax profit |
65.2 |
68.0 |
73.0 |
77.9 |
| Tax |
(12.3) |
(13.6) |
(14.6) |
(15.6) |
| Minorities |
(0.3) |
(0.3) |
(0.3) |
(0.3) |
| Net profit |
52.5 |
54.0 |
58.1 |
62.0 |
| Net profit (adj.) |
52.5 |
54.0 |
58.1 |
62.0 |
Balance Sheet
| Year to 31 Dec (US\$m) |
2024 |
|
