Broker: CGS International
Date of Report: July 8, 2025
Food Empire Holdings: Robust Growth, Potential Bonus Issue, and Peer Insights in Asia’s Food & Beverage Sector
Overview: Food Empire Holdings Poised for a Landmark Year
Food Empire Holdings Ltd (FEH), a leading Singapore-based food and beverage company, is on track for a strong 2025, marking its 25th anniversary as a listed company. With anticipated double-digit revenue and profit growth, a potential bonus issue, and sustained expansion across key markets, FEH stands out in the sector. The company’s performance is especially notable as Singapore also celebrates its 60th birthday, offering a unique opportunity for shareholder rewards and heightened market presence.
Key Financial Highlights and Growth Trajectory
- 1H25F Revenue and Profit: Projected to reach US\$261 million (+16% year-on-year), with core net profit estimated at US\$30 million (+27% year-on-year, +15% half-on-half).
- Strong Q1 Performance: 1Q25 revenue grew 16% year-on-year, setting the pace for the first half to contribute about 50% of full-year revenue.
- Dividend Policy: FEH typically announces only a final and special dividend (if any) at year-end. No interim dividend is expected for 1H25F.
Potential Bonus Issue for 25th Anniversary and SG60
- FEH’s share price is at its highest since its 2000 listing. The dual milestone—25 years listed and Singapore’s 60th birthday—positions the board to consider a bonus issue for shareholders.
- A bonus issue, while not altering valuation, increases trading liquidity. This aligns strategically with upcoming updates to the S\$5bn Equity Market Development Programme (EMDP) by the Monetary Authority of Singapore (MAS).
- Higher trading liquidity may also attract larger institutional fund managers.
- The last bonus issue was in 2008 (1 bonus share for every 5 held).
Share Price Outlook and Recommendation
- Current Price: S\$1.86
- Target Price: S\$2.28 (22.6% upside)
- Any share price weakness from the US\$20m non-cash revaluation loss on its Redeemable Exchange Note (REN) is viewed as a buying opportunity.
- Recommendation: Add (no change)
- TP based on 14.2x FY26F P/E, 2 standard deviations above the 9-year average, supported by a 10.3% EPS CAGR (FY24-27F).
Key Catalysts and Risks
- Re-rating Catalysts:
- Improving operating margins with stabilizing market demand
- Maintaining market share in Russia
- Resolution to the Russia-Ukraine conflict
- Downside Risks:
- Escalation of the Russia-Ukraine conflict impacting Russian operations
- Depreciation of the ruble vs. the US dollar, reducing reported revenue
- Awaiting updates on initiatives proposed by Ikhlas Capital following REN issuance
Food Empire Holdings: Financial Summary Table
| Year (Dec) | Revenue (US\$m) | Operating EBITDA (US\$m) | Net Profit (US\$m) | Core EPS (US\$) | Core EPS Growth (%) | FD Core P/E (x) | DPS (US\$) | Dividend Yield (%) | EV/EBITDA (x) | P/FCFE (x) | Net Gearing (%) | P/BV (x) | ROE (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023A | 425.7 | 81.7 | 56.51 | 0.11 | (5.0) | 13.64 | 0.075 | 5.13 | 8.15 | 20.5 | (30.6) | 2.59 | 19.7 |
| 2024A | 476.3 | 75.0 | 52.91 | 0.10 | (10.7) | 15.28 | 0.060 | 4.11 | 9.48 | 114.1 | (16.2) | 2.60 | 17.0 |
| 2025F | 522.6 | 89.7 | 60.02 | 0.11 | 19.8 | 12.75 | 0.060 | 4.11 | 7.79 | 18.2 | (18.4) | 2.37 | 19.5 |
| 2026F | 572.0 | 101.8 | 65.73 | 0.12 | 9.5 | 11.64 | 0.060 | 4.11 | 6.79 | 16.6 | (18.8) | 2.14 | 19.4 |
| 2027F | 604.1 | 110.9 | 70.98 | 0.13 | 8.0 | 10.78 | 0.060 | 4.11 | 6.06 | 14.9 | (21.8) | 1.93 | 18.9 |
Peer Comparison: How Food Empire Stacks Up in Asia
| Company | Ticker | Reco. | Price (LC) | Target Price (LC) | Market Cap (US\$m) | P/E CY25F | P/E CY26F | 3-Year EPS CAGR (%) | P/BV CY25F | ROE CY25F (%) | Dividend Yield (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Food Empire Holdings Ltd | FEH SP | Add | 1.84 | 2.28 | 760 | 12.6 | 11.5 | 10.3 | 2.35 | 19.5 | 4.1 |
| Ajinomoto Co Inc | 2802 JP | NR | 3,955 | NA | 27,267 | 56.7 | 28.5 | 30.2 | 5.32 | 14.9 | 1.2 |
| Fraser & Neave Holdings | FNH MK | Add | 28.80 | 36.50 | 2,494 | 18.1 | na | na | 2.64 | 15.6 | 2.9 |
| Mayora Indah Tbk PT | MYOR IJ | NR | 2,140 | NA | 2,912 | 15.5 | 13.1 | 11.5 | 2.52 | 17.1 | 2.5 |
| Monde Nissin Corp | MONDE P | NR | 7.29 | NA | 2,391 | 12.4 | 11.4 | 223.5 | 2.04 | 17.3 | 2.9 |
| Nestle (Malaysia) | NESZ MK | Reduce | 77.10 | 78.00 | 4,269 | 32.8 | 30.2 | na | 30.85 | 96.7 | 2.8 |
| Nestle SA | NESN SW | NR | 79.27 | NA | 252,635 | 18.3 | 17.1 | 5.7 | 5.24 | 29.5 | 3.9 |
| Nissin Foods Holdings Co Ltd | 2897 JP | NR | 3,006 | NA | 5,956 | 16.3 | 14.8 | 5.7 | 1.75 | 11.7 | 2.4 |
| Nongshim Co Ltd | 004370 | NR | 395,500 | NA | 1,756 | 12.8 | 11.7 | 10.3 | 0.85 | 6.7 | 1.3 |
| Power Root Bhd | PWRT MK | Hold | 1.34 | 1.34 | 134 | 14.6 | 13.3 | na | 1.88 | 13.0 | 5.9 |
| TAC Consumer PCL | TACC TB | NR | 4.42 | NA | 82 | 9.5 | 8.8 | 12.9 | 3.42 | 37.6 | 10.0 |
| Thai Beverage | THBEV SP | Add | 0.47 | 0.56 | 9,138 | 10.9 | na | na | 1.83 | 17.6 | 5.5 |
| Toyo Suisan Kaisha Ltd | 2875 JP | NR | 9,395 | NA | 6,894 | 15.0 | 14.3 | 4.4 | 1.80 | 12.9 | 2.3 |
| Uni-President Enterprises | 1216 T | NR | 82.50 | NA | 16,396 | 19.6 | 18.4 | 10.3 | 3.38 | 17.9 | 4.1 |
| Universal Robina Corp | URC PM | NR | 90.10 | NA | 3,567 | 15.3 | 14.4 | 7.7 | 1.63 | 10.3 | 4.3 |
| Yakult Honsha Co Ltd | 2267 J | NR | 2,680 | NA | 6,050 | 17.8 | 16.1 | 3.3 | 1.35 | 8.1 | 2.5 |
Simple average (excluding Food Empire): P/E CY25F: 19.0x, P/BV CY25F: 4.43x, ROE CY25F: 21.8%, Dividend Yield: 3.6%
ESG & Country Risk: Key Considerations
- FEH faces country concentration risk with 30% of FY24 revenue from Russia and 7% from Ukraine. To diversify, FEH is growing its 3-in-1 coffee mix business in Vietnam and its food ingredients business in India and Malaysia.
- Product safety is a core concern; FEH achieved zero non-compliance incidents with health, safety, and labelling regulations in FY24.
- Environmental efforts include energy-saving initiatives in Food Empire Vietnam: day/night light systems, solar perimeter lighting, sky lights, and LED lamps.
Detailed Financials: Cash Flow and Balance Sheet Snapshots
Cash Flow Highlights (US\$m)
| Year | EBITDA | Operating Cashflow | Capex | Free Cashflow to Equity | Dividends Paid | Total Cash Generated |
|---|---|---|---|---|---|---|
| 2023A | 81.75 | 53.86 | (12.16) | 37.65 | (17.29) | 9.95 |
| 2024A | 74.96 | 25.52 | (24.43) | 6.70 | (39.16) | 0.00 |
| 2025F | 89.68 | 62.13 | (20.00) | 42.13 | (31.41) | 10.72 |
| 2026F | 101.82 | 76.06 | (30.00) | 46.06 | (31.41) | 14.65 |
| 2027F | 110.89 | 81.44 | (30.00) | 51.44 | (31.41) | 20.03 |
Balance Sheet Highlights (US\$m)
| Year | Total Cash | Total Debtors | Inventories | Total Assets | Total Liabilities | Shareholders’ Equity |
|---|---|---|---|---|---|---|
| 2023A | 131.3 | 42.4 | 76.7 | 402.9 | 108.4 | 295.6 |
| 2024A | 130.9 | 54.0 | 110.8 | 460.1 | 164.0 | 293.8 |
| 2025F | 142.7 | 58.9 | 121.4 | 494.5 | 169.8 | 322.4 |
| 2026F | 150.3 | 64.0 | 133.8 | 534.6 | 175.6 | 356.7 |
| 2027F | 169.8 | 67.3 | 141.3 | 577.9 | 179.4 | 396.3 |
Key Metrics and Operational Ratios
- Revenue Growth (2025F): 9.7%
- Operating EBITDA Margin (2025F): 17.2%
- Net Cash Per Share (2025F): US\$0.11
- Book Value Per Share (2025F): US\$0.61
- Gross Interest Cover (2025F): 13.45x
- Effective Tax Rate (2025F): 20.0%
- Net Dividend Payout Ratio (2025F): 52.3%
- Accounts Receivable Days (2025F): 36.3
- Inventory Days (2025F): 121.0
- Accounts Payables Days (2025F): 61.15
- ROIC (2025F): 30.5%
- ROCE (2025F): 19.9%
- Return on Average Assets (2025F): 12.9%
Conclusion: Food Empire Holdings – A Compelling Play in Asian F&B
Food Empire Holdings continues to deliver strong earnings growth and margin expansion, supported by robust performance in its key markets and ongoing diversification. The possibility of a bonus issue in 2025 could further boost shareholder value and liquidity. With a positive outlook, attractive valuation versus peers, and disciplined financial management, FEH remains a compelling investment candidate for those seeking exposure to the Asian food and beverage sector.
Broker Rating and Sector Outlook
- Stock Rating: Add (total return expected to exceed 10% over the next 12 months)
- Sector Outlook: Positive, with a focus on growth, liquidity, and operational resilience
- Peer Group: FEH is competitive across P/E, yield, and ROE metrics, standing out for its strong growth and prudent capital allocation
