Title: Continued Growth Amidst Rising Coffee Prices – Food Empire Holdings Ltd.
March 17, 2025 | KGI Securities (Singapore) Pte. Ltd.

Continued Growth Amidst Rising Coffee Prices

Food Empire Holdings Ltd.

Sustained Increase in Sales Across Core Markets

Food Empire Holdings saw a sustained increase in sales across its core markets in FY24, showcasing a resilient consumer demand for the company’s products. The group witnessed volume growth year-over-year, especially in the Southeast Asia and South Asia regions. [[1]] The company continues to reap the benefits of its brand-building efforts in Vietnam, increasing its market share across the Vietnamese market. [[1]] Demand for the group’s products in South Asia also remains strong amidst a coffee consumption boom in the region. [[1]]

Expanding Production Capabilities Across Asia

The group is significantly expanding its production capabilities across Asia. In Malaysia, a non-dairy creamer facility expansion was completed in 2Q2024, with full utilization expected within three years. [[1]] Additionally, a snack facility expansion is slated for completion by 1Q2025, with production starting in 2Q2025, substantially increasing snack output. [[1]] The group is also building its first coffee-mix production facility in Central Asia, located in Kazakhstan. Scheduled for completion by the end of 2025, the facility is expected to increase coffee-mix production capacity by approximately 15%. [[1]]

Increased Dividends for Third Consecutive Year

The Board proposes a total dividend of 8.0 Singapore cents per ordinary share for FY24, comprising a first and final dividend of 6.0 Singapore cents and a special dividend of 2.0 Singapore cents. [[1]] This marks the third consecutive year of an increase in dividends (excluding special dividends).

Headwinds from Higher Coffee Prices

While the group continues to face headwinds such as higher coffee prices resulting in price disruptions, as well as a strong US dollar, demand continues to remain robust for the group’s products. [[1]] To mitigate the impact of higher coffee prices, the company is gradually adjusting its selling prices, passing on some of the increased costs to customers while maintaining profit margins. [[2]]

Optimistic Outlook and Recommendation

The KGI research team remains optimistic about the group’s business going forward and maintains an OUTPERFORM recommendation. The target price is increased to S\$1.40, based on a blended valuation of Discounted Cash Flow (DCF) and comparable Multiples Valuation. [[4]]