CGS International
August 13, 2025

Food Empire Holdings: Robust Growth, Strong Fundamentals, and Record-Breaking Momentum in 2025

Overview: Food Empire Holdings’ Stellar 1H25 Performance

Food Empire Holdings Ltd (FEH), a Singapore-headquartered food and beverage company, has demonstrated impressive financial strength and operational resilience in the first half of 2025. All regions recorded double-digit year-on-year revenue growth, propelling the group’s revenue to US\$274 million, a 22% increase year-on-year and 5% above expectations. Excluding a significant non-cash valuation loss, core net profit soared 36% year-on-year to US\$31.5 million, similarly beating forecasts.

Key Financial Highlights for 1H25

• Revenue reached US\$274 million (+22% yoy), surpassing expectations by 5%.
• Core net profit (excluding non-cash items) came in at US\$31.5 million (+36% yoy), also 5% above projections.
• Reported profit after tax (PAT) was a loss of US\$1.1 million due to a non-cash fair valuation loss of US\$32.6 million on its Redeemable Exchange Note (REN). Excluding this, PAT grew 36% yoy.
• All major regions delivered double-digit revenue growth:
  • Russia: Revenue up 22% yoy to US\$83 million, driven by 2H24 price hikes and a stronger ruble.
  • Southeast Asia: Highest regional growth at 25.3% yoy to US\$78 million, led by Vietnam’s robust sales and expanded marketing.
  • South Asia: Revenue up 25.1% yoy to US\$37 million, reflecting high demand for soluble coffee.

Management Outlook and Strategic Initiatives

Management has stated that FEH is on track to achieve another record-breaking year in FY25. The company has resolved the accounting treatment of its REN, minimizing the risk of further non-cash revaluation losses in the second half of the year. Interim dividends per share (DPS) of 3.0 Singapore cents were declared, underscoring confidence in the company’s trajectory.

Valuation Update and Investment Thesis

CGS International has raised its target price for FEH to S\$2.94 (from S\$2.73), rolling over valuation to FY27 at a still-attractive 17x P/E, reflecting the company’s dominant market share in Russia and Vietnam and positive growth prospects for its ingredients business. Despite a one-off, non-cash loss, the broker maintains its ‘Add’ recommendation, viewing any share price weakness as a buying opportunity.

Key Investment Catalysts

• Improving operating margins, particularly with Russian net margins growing from 7.5% in 1H24 to 13.2% in 1H25.
• Sustained market share in Russia (30% of 1H25 revenue).
• Potential resolution of the Russia-Ukraine conflict.
• Business momentum and liquidity support from the Monetary Authority of Singapore’s (MAS) S\$5bn Equity Market Development Programme (EMDP).

Key Risks

• Escalation of the Russia-Ukraine conflict, which could impact Russian operations.
• Depreciation of the Russian ruble against the US dollar, impacting reported revenues.

Comprehensive Financial Summary

Recent Share Performance and Ownership

• Current price: S\$2.40 (as of report date)
• Target price: S\$2.94
• Market cap: S\$1,268 million (US\$990.1 million)
• 1-month price change: +26.3%
• 3-month price change: +56.9%
• 12-month price change: +144.9%
• Major shareholders:
  • Universal Integrated Corp: 25.0%
  • Tan Guek Ming: 12.0%
  • Nair Sudeep: 13.2%

Peer Comparison Snapshot

FEH’s valuation remains attractive relative to sector peers, with a forward P/E of 17x, underscoring its premium market position and growth prospects. Further details are available in the broker’s comparative analysis.

ESG and Country Risk Analysis

• Country Concentration: Russia and Ukraine combined contributed 37% of FY24 revenue (Russia: 30%, Ukraine: 7%). FEH continues to diversify, expanding its coffee mix business in Vietnam and food ingredient production in India and Malaysia.
• Product Safety: FEH maintains rigorous quality and safety standards across its portfolio, with zero non-compliance incidents in FY24.
• Environmental Initiatives: FEH’s Vietnam operations have implemented energy-saving measures, including solar lighting and LED upgrades, to improve resource efficiency and reduce emissions.

Balance Sheet and Cash Flow Analysis

Operational and Market Efficiency Metrics

• ROE: 19.7% (2023A), 17.0% (2024A), 8.9% (2025F), recovering to 19.5% (2026F) and 19.0% (2027F).
• Operating EBITDA Margin: 19.2% (2023A), 15.7% (2024A), 17.2% (2025F), 17.8% (2026F), 18.4% (2027F).
• Net Dividend Payout Ratio: 73% (2023A), 66% (2024A), 120% (2025F), 50% (2026F), 47% (2027F).
• Inventory Days: 100.6 (2023A), 107.1 (2024A), 121.0 (2025F), 120.9 (2026F), 123.7 (2027F).
• Accounts Receivables Days: 29.85 (2023A), 33.69 (2024A), 36.30 (2025F), 36.36 (2026F), 36.99 (2027F).

Dividend Policy and Shareholder Rewards

FEH has maintained a stable dividend policy, with forecast DPS of US\$0.063 through 2025–2027, reflecting a robust dividend yield of 3.34%. The interim DPS of 3.0 Singapore cents in 1H25 was a positive surprise, highlighting management’s confidence.

Conclusion: Strong Fundamentals and Growth Prospects

Food Empire Holdings continues to deliver above-expectation results, leveraging its geographic diversification, strong brand presence in Russia and Vietnam, and prudent operational management. With a raised target price and ongoing strategic initiatives, FEH stands out as a compelling opportunity in the Asia-Pacific food and beverage sector, offering investors both growth and resilience amidst regional and global uncertainties. The company’s commitment to ESG standards and prudent risk management further strengthens its long-term investment case.