Broker: Maybank Research Pte Ltd
Date of Report: July 21, 2025

Food Empire Holdings: Riding Asia’s Coffee Wave with Strong Growth, Strategic Partnerships, and Resilient Financials

Introduction: A New Chapter for Food Empire Holdings

Food Empire Holdings (FEH), a Singapore-based global food and beverage company, is making bold strides in Asia’s rapidly expanding consumer staples market. With a robust history as a market leader in Russia’s 3-in-1 coffee segment, FEH is accelerating its regional presence, driving diversification, and unveiling new growth engines through innovative partnerships and manufacturing expansion. Maybank Research maintains a BUY rating, raising the target price to SGD2.62, reflecting confidence in FEH’s strategic direction and financial strength.

Strategic Partnerships: Entry into Southeast Asia’s Ready-to-Drink Market

FEH recently inked a preliminary memorandum of understanding (MOU) with Santan Food Services, a subsidiary of Capital A Berhad. This partnership will co-develop and introduce a new range of ready-to-drink beverages, with the debut product being a Vietnamese iced coffee. This beverage will be sold on AirAsia flights and through selected retail outlets under the Santan brand, opening FEH to new market segments and increasing brand visibility across Southeast Asia.

• Vietnamese iced coffee to be sold on AirAsia flights and select retail channels
• Co-development of a wider range of ready-to-drink beverages planned
• Strategic expansion aligns with FEH’s goal of breaking into more Southeast Asian markets

Manufacturing Expansion: Strengthening Asian Footprint

The company’s ambitious expansion is underscored by significant manufacturing investments across Asia:

• Vietnam: Construction of a freeze-dried soluble coffee facility, targeted for completion by 2028, will position FEH as a leading soluble coffee manufacturer in the region.
• Malaysia: Ongoing expansion of its snack manufacturing plant, expected to increase capacity by 50% by Q3 2025. The newly expanded non-dairy creamer plant will further boost production capacity utilization.
• Kazakhstan: The first coffee-mix manufacturing plant is scheduled for completion by end-2025, marking FEH’s push into Central Asia.

Diversification and Revenue Mix: Justifying a P/E Re-rating

Historically, FEH’s revenues and profits were dominated by its Russian operations, which led to a valuation discount versus global peers. With Russia’s contribution now below historical levels and Asia becoming the primary growth driver, FEH’s successful diversification into new markets justifies a re-rating with a reduced discount to peers. The current target price of SGD2.62 is based on a higher 17x FY25E P/E, up from 13x, and supported by a solid 5%+ dividend yield.

Financial Highlights: Consistent Growth and Robust Margins

FEH’s financial performance underscores its growth momentum and operational resilience:

• 2023-2027 Revenue CAGR: Robust growth with FY25E revenue of USD519m
• Core EPS growth expected to rebound 22.9% in FY25E
• Dividend yield remains attractive, consistently above 5%
• Net cash position maintained throughout, highlighting balance sheet strength

Operational and ESG Excellence: Key Value Drivers

FEH’s value proposition is built on market leadership, integrated manufacturing, and strong brand recognition. The company’s ESG (Environmental, Social, and Governance) credentials are above average, with an overall ESG score of 60, reflecting established frameworks and targets, though improvement is needed in quantitative “S” and “G” metrics.

• Freeze-dried coffee plant in India supports full integration and cost advantages
• Brand recognized as one of Singapore’s Top 100 Most Valuable Brands (USD101m valuation)
• Consistently self-funded capex and generous annual dividends
• Clear ESG policies, energy conservation initiatives, and comprehensive safety training for workers

ESG Quantitative Metrics

• Switch to electric forklifts since 2020, reducing Scope 1 emissions
• 100% of workers receive at least one safety training annually
• Zero confirmed incidents of corruption or non-compliance with regulations

Corporate Governance and Management Structure

• Board comprises eight directors (Executive Chairman, CEO/Executive Director, six independent Non-Executive Directors)
• Committees (nominating, audit, remuneration) chaired by independent directors
• Board diversity: 87.5% male, opportunity to enhance gender diversity
• Major shareholders: Tan Wang Cheow (22.5%), Sudeep Nair (11.27%), institutional investor FMR LLC (8%)
• External auditor: Ernst & Young LLP

Risks and Swing Factors

Upside:

• Peaceful resolution of Russia-Ukraine conflict
• Continued robust growth in Asian markets and further revenue diversification
• Potential acquisition target for larger F&B players or private equity

Downside:

• Escalation of the Russian war impacting business
• Risks from higher raw material prices and Ruble depreciation
• Temporary loss of market share due to new entrants

Valuation and Share Performance

• Current share price: SGD2.26
• 12-month price target: SGD2.62 (+27%)
• Market capitalization: SGD1.2B
• 52-week high/low: SGD2.26/0.95
• Free float: 30.6%

Price Performance:

• 1 Month: +27% (absolute), +19% (relative to index)
• 3 Months: +70% (absolute), +51% (relative to index)
• 12 Months: +124% (absolute), +85% (relative to index)

Conclusion: Food Empire Holdings Poised for Continued Outperformance

Food Empire Holdings stands out with its strategic pivot to Asia, innovative product launches, and manufacturing scale-up. Its financial profile remains robust, supported by strong cash flow, attractive dividends, and a solid balance sheet. As it enhances its ESG credentials and broadens its revenue base, FEH is well-positioned to capture further upside for investors seeking exposure to Asia’s dynamic food and beverage sector.

Company Coverage

• Food Empire Holdings (FEH SP): BUY rating, target price SGD2.62, strong Asia expansion, resilient financials, above-average ESG profile.
• Capital A (KLSE 5099): Not rated, mentioned as strategic partner via Santan Food Services for ready-to-drink beverages on AirAsia flights.

Analyst Contact

Jarick Seet Maybank Research Pte Ltd [email protected] (+65) 6321 5848

Disclaimer

This article is for informational and educational purposes only and does not constitute investment advice. Investors should consult a financial advisor before making investment decisions.