CGS International Securities
July 23, 2025
Food Empire Holdings: Rising Star in the Global F&B Sector with Strong Expansion and Robust Financials
Overview: Strong Market Interest and Strategic Vision
Food Empire Holdings Ltd (FEH), a leading Singapore-based food and beverage (F&B) company, has garnered strong investor attention following its recent presentation at the Singapore Exchange’s partner event. The company’s strategic initiatives, regional expansion, and resilience amid macroeconomic and geopolitical challenges are driving its bullish outlook.
- Current Price: S\$2.40
- Target Price: S\$2.73
- Market Cap: US\$992.4m (S\$1,268m)
- Free Float: 39.6%
- Recommendation: ADD (No Change)
- Consensus Ratings: 5 Buy, 0 Hold, 0 Sell
- Coverage Analyst: William TNG, CFA
Investor Focus: Key Questions and Management Responses
At the SGX event, participants were eager to understand FEH’s forward strategy, the impact of Russia-related sanctions, competitive threats from Chinese F&B players, and risks from raw material price volatility. Key management insights included:
- Geographic Diversification: FEH is prioritizing business growth in Southeast Asia to reduce revenue dependency on Russia, which accounted for 30% of FY24 revenue. Ukraine added another 7%, making the region’s combined contribution 37%.
- Sanctions Management: Food products generally avoid direct sanctions. FEH employs a dedicated team and external consultants to ensure compliance in Russia.
- Competitive Landscape: The main competitors in Russia’s 3-in-1 coffee mix market are local and Western brands, with minimal presence from Chinese F&B players. FEH’s unique CIS, Vietnam, India, and Malaysia exposure makes it an attractive M&A target for Chinese entrants seeking international expansion.
- Raw Material Prices: Input prices have eased since 1H24, and FEH’s price increases in 2H24 are expected to support margin expansion in 1H25F.
Valuation Upside: Supported by Singapore’s S\$5bn Equity Market Development Programme
FEH is well positioned for a valuation re-rating, especially with the Monetary Authority of Singapore’s (MAS) S\$5bn Equity Market Development Programme (EMDP) injecting further liquidity and institutional demand into the market. The company’s valuation could reach a 17x FY26F P/E, which is three standard deviations above its nine-year average, supporting the target price of S\$2.73.
Key Financial Highlights and Forecasts
Financial Summary (US\$m):
| Year |
2023A |
2024A |
2025F |
2026F |
2027F |
| Revenue |
425.7 |
476.3 |
522.6 |
572.0 |
604.1 |
| Operating EBITDA |
81.7 |
75.0 |
89.7 |
101.8 |
110.9 |
| Net Profit |
56.51 |
52.91 |
60.02 |
65.73 |
70.98 |
| Core EPS (US\$) |
0.11 |
0.10 |
0.11 |
0.12 |
0.13 |
| Core EPS Growth |
(5.0%) |
(10.7%) |
19.8% |
9.5% |
8.0% |
| FD Core P/E (x) |
17.61 |
19.73 |
16.47 |
15.04 |
13.92 |
| DPS (US\$) |
0.075 |
0.060 |
0.060 |
0.060 |
0.060 |
| Dividend Yield |
3.97% |
3.18% |
3.18% |
3.18% |
3.18% |
| EV/EBITDA (x) |
10.90 |
12.46 |
10.28 |
8.98 |
8.07 |
| Net Gearing |
(30.6%) |
(16.2%) |
(18.4%) |
(18.8%) |
(21.8%) |
| P/BV (x) |
3.34 |
3.36 |
3.07 |
2.77 |
2.49 |
| ROE |
19.7% |
17.0% |
19.5% |
19.4% |
18.9% |
Profitability and Financial Ratios
- Revenue Growth: 6.9% (2023A), 11.9% (2024A), 9.7% (2025F), 9.5% (2026F), 5.6% (2027F)
- Operating EBITDA Margin: 19.2% (2023A), 15.7% (2024A), 17.2% (2025F), 17.8% (2026F), 18.4% (2027F)
- Net Cash Per Share: US\$0.17 (2023A), US\$0.09 (2024A), US\$0.11 (2025F), US\$0.13 (2026F), US\$0.17 (2027F)
- Gross Interest Cover: 20.04 (2023A), 14.93 (2024A), 13.45 (2025F), 15.23 (2026F), 16.47 (2027F)
- ROIC: 37.7% (2023A), 31.7% (2024A), 30.5% (2025F), 32.4% (2026F), 31.8% (2027F)
Balance Sheet Strength and Cash Flow Generation
- Total Cash and Equivalents: US\$131.3m (2023A), US\$130.9m (2024A), US\$142.7m (2025F), US\$150.3m (2026F), US\$169.8m (2027F)
- Shareholders’ Equity: US\$295.6m (2023A), US\$293.8m (2024A), US\$322.4m (2025F), US\$356.7m (2026F), US\$396.3m (2027F)
- Free Cash Flow to Equity: US\$37.7m (2023A), US\$6.7m (2024A), US\$42.1m (2025F), US\$46.1m (2026F), US\$51.4m (2027F)
- Capex: US\$12.2m (2023A), US\$24.4m (2024A), US\$20.0m (2025F), US\$30.0m (2026F), US\$30.0m (2027F)
Peer Comparison: Comprehensive Benchmarking Across Asia and Global Players
| Company |
Ticker |
Rec. |
Price (lcl) |
Target (lcl) |
Market Cap (US\$m) |
P/E 2025F |
P/E 2026F |
3Y EPS CAGR |
P/BV 2025F |
ROE 2025F |
Div. Yield 2025F |
| Food Empire Holdings |
FEH SP |
Add |
2.40 |
2.73 |
992 |
16.5 |
15.0 |
10.3% |
3.07 |
19.5% |
3.2% |
| Ajinomoto Co Inc |
2802 JP |
NR |
3,992 |
NA |
26,703 |
57.2 |
28.8 |
29.6% |
5.28 |
15.0% |
1.2% |
| Fraser & Neave Holdings |
FNH MK |
Add |
28.70 |
36.50 |
2,490 |
18.0 |
16.8 |
8.3% |
2.63 |
14.8% |
2.9% |
| Monde Nissin Corp |
MONDE PM |
Add |
7.65 |
10.50 |
2,416 |
13.1 |
12.1 |
12.6% |
2.17 |
17.2% |
1.8% |
| Nestle (Malaysia) |
NESZ MK |
Reduce |
76.90 |
78.00 |
4,265 |
32.7 |
30.1 |
-3.6% |
30.77 |
94.0% |
2.8% |
| Nestle SA |
NESN SW |
NR |
77.72 |
NA |
251,551 |
17.9 |
16.8 |
5.6% |
5.20 |
29.8% |
4.0% |
| Nissin Foods Holdings |
2897 JP |
NR |
2,909 |
NA |
5,945 |
15.8 |
14.3 |
6.0% |
1.76 |
11.6% |
2.4% |
| NongShim Co Ltd |
004370 KS |
Add |
398,000 |
500,000 |
1,760 |
11.5 |
10.7 |
5.0% |
0.88 |
8.4% |
1.3% |
| Power Root Bhd |
PWRT MK |
Hold |
1.31 |
1.34 |
131 |
14.3 |
13.0 |
-1.9% |
1.84 |
12.6% |
6.0% |
| Universal Robina Corporation |
URC PM |
Add |
94.00 |
104.0 |
3,534 |
16.7 |
15.3 |
2.0% |
1.65 |
9.8% |
4.0% |
Food Empire’s valuation (16.5x 2025F P/E) remains competitive within the regional and international F&B landscape, with many global peers ranging between 13x and 38x, depending on growth, market focus, and profitability metrics. The group’s 10.3% three-year EPS CAGR outpaces several regional and global rivals.
Re-rating Catalysts and Downside Risks
Potential Upside Triggers:
- Operating margin expansion as raw material prices stabilize and market demand remains healthy
- Sustained market share in Russia and CIS regions
- Possible resolution in the Russia-Ukraine conflict
- Increased liquidity and institutional demand via MAS’s S\$5bn EMDP
Key Risks:
- Escalation of the Russia-Ukraine conflict impacting Russian operations
- Depreciation of the ruble vs. US dollar, which could lower reported revenue and profits
ESG: Corporate Responsibility and Sustainability Initiatives
FEH’s ESG priorities focus on product safety, regulatory compliance, and resource efficiency. In FY24, the group achieved its targets of zero confirmed incidents of non-compliance with health, safety, and labeling regulations. The company also continues to implement energy-saving initiatives, especially in its Vietnam operations with solar lighting, LED upgrades, and daylight optimization.
Shareholder Structure and Major Investors
- Universal Integrated Corp: 25.0%
- Tan Guek Ming: 12.0%
- Nair Sudeep: 13.2%
Conclusion: Attractive Growth Story with Room for Re-rating
Food Empire Holdings stands out in the F&B sector with strong financial performance, a clear diversification strategy, and robust risk management. The company’s valuation offers room for further upside, supported by improving fundamentals, favorable sector positioning, and continued institutional support under Singapore’s EMDP. Investors seeking long-term growth in emerging and established Asian food markets should keep FEH on their radar.
