Singapore Stocks That Could See Their Share Prices Head Higher: Food Empire
Food Empire manufactures and sells instant beverages and snack foods in over 50 countries.
The group operates eight manufacturing facilities in five countries and has 23 offices worldwide.
Food Empire saw its 2022 revenue climb 24.5% year on year to US$398.4 million while gross profit improved by 26.9% year on year to US$118.8 million.
Net profit soared more than three-fold year on year to US$60.1 million.
Food Empire expects to grow its Vietnam revenue this year as it prepares to expand its production capacity.
The group’s Indian coffee plants are operating at full capacity, supported by international demand, and management expects this division to perform better in 2023.
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丰衣足食 : RHB raised Food Empire's price target to $1.39 as its profit prospects remain strong
3/16/2023
RHB raised Food Empire's price target to $1.39 as its profit prospects remain strong
For the 2022 fiscal year ending December 31, 2022, Food Empire reported record earnings of $60.1 million ($81.2 million), exceeding RHB's expectations.
RHB Group Research maintained a 3% “buy” rating for Food Empire F03, and analyst Alfie Yeo took over the company.
In his March 16 report, Yeo raised the company's price target to $1.39 from the previous 95 cents as he emphasized the company's profit prospects.
For the 2022 fiscal year ending December 31, 2022, Food Empire reported record earnings of $60.1 million ($81.2 million), exceeding RHB's expectations. This year's earnings came mainly from Food Empire's main markets, namely Russia, Ukraine, Kazakhstan, the Commonwealth of Independent States (CIA), and South Asia.
“Food Empire, as an essential food producer, did not experience any significant impact on sales in Russia and Ukraine. The retail channel and supply chain continue to operate,” Yeo notes.
“Despite the increase in sales prices, sales in Russia and Ukraine have remained stable,” he added.
With the exception of the front line entering central Ukraine, where Food Empire's factories are located, Yeo said he sees “stable prospects” for Food Empire's earnings in these major markets.
See Also: Dahua Jiji raises Raffles Healthcare's price target as its transitional care facility joins Singapore's healthcare ecosystem
“As a brand owner, Food Empire is able to maintain its profitability better than distributors and retailers, particularly in Russia and Ukraine,” he said.
In addition to the higher target price, Yeo also raised its core earnings forecast for FY2023 to FY2024 by 33% to 35% to $52 million and $55 million, respectively.
He also raised revenue forecasts for FY2023 and 2024 by 8% to 13%, while taking into account “more efficient” operating expenses (opex) and higher operating margins based on current operating rates. For Yeo, the move is sustainable, provided that Russia has better influence and economies of scale.
Yeo's new price target is based on Food Empire's FY2023 price-earnings ratio of 10x, with no environmental, social, and governance (ESG) discounts or premiums, as the group's ESG rating is in line with the country's median.
Food Empire's stock closed at 87 cents on March 15, and its price was 6 times its price-earnings ratio for fiscal year 2023, or -1 standard deviation (s.d.) from its price-earnings ratio average of 9 times In Yeo's opinion, this is “convincing.”
Although Yeo is generally optimistic about Food Empire, he is also careful to point out that the interruption of operations due to the Russia-Ukraine war and currency fluctuations in the company's main markets are downside risks he predicts
丰衣足食 : With the company's stock buybacks and dividends, and business growth is favorable, it is estimated that the stock price will continue to rise. Food Empire
EPS: 11 sen
Pe:11
Stock price: $1.21
丰衣足食 : 1.04 buy more
丰衣足食 : Food Empire Holdings' (SGX: F03) three-year earnings growth lagged behind 36% year-over-year shareholder return
丰衣足食 : Buy 1.02, challenge 1.05 next week to break first, then to 1.10
丰衣足食 : 1.01 BUY
丰衣足食 : 1.02 buy more
丰衣足食 : Dahua Jiji remains optimistic about the future of the food empire as demand remains relatively strong
Dahua Jixian reiterated its “buy” recommendation for Food Empire F03 -0.97%, with a target price of $1.28, as analysts John Cheong and Heidi Mo believe the group continued to buy back shares in the first quarter of fiscal year 2023 ending March, which led to a rise in stock prices, particularly after core revenue increased 134% year-on-year to $45 million ($59.9 million) in FY2022.
During the first quarter, Food Empire bought back nearly 2 million shares for 65 cents to 90 cents. That's close to a 52-week high of 96 cents.
As the group's fiscal 2022 dividend also doubled and core earnings grew strongly over the past four quarters, analysts believe the group is confident about its future prospects.
The increase was mainly due to increased consumer demand for Food Empire products, as their prices were affordable, supply chain issues were alleviated, and product portfolio improvements increased net profit margins.
Additionally, the group has announced that it will pay a dividend of 4.4 cents per share for fiscal year 2022, double the dividend of 2.2 cents per share for fiscal year 2021
&ldquoAdditionally, any positive development in the Russia-Ukraine conflict could lead to a further revaluation of Far East Holdings, which traded 40%-50% lower than its peers, &rdquo Cheong and Mo said.
As far as prospects are concerned, the group expects strong consumer demand across its segments despite rising inflationary pressures and average selling prices (ASP). Analysts said that due to the consumer necessities nature of the group's products, demand is relatively inflexible in price.
Even with rising prices, the group's products in the coffee sector are still affordable enough to appeal to the public, leading to sustainable or stronger demand in FY2022. As a result, analysts believe sales volumes are more susceptible to market fluctuations. &ldquoAs supply chain disruptions in some markets ease, we expect future earnings to increase and profit margins to increase, &rdquo Cheong and Mo said.
Demand remains strong as geopolitical uncertainty has led to inflationary pressure and currency fluctuations. Analysts' forecasts include a 7% increase in core earnings for FY2023 and a further 7% increase in core earnings for FY2024.
&ldquoWe think Food Empire's valuation is extremely attractive, 8.3 times the price-earnings ratio for FY2023, 1 standard deviation below its long-term average, and about 40-50% off from its local and regional peers, &rdquo analysts said.
丰衣足食 : This wave of adjustments has been completed, 1.04 was bought at bargain prices, and the future market is promising.
丰衣足食 : Buy 1.05. The day of a good harvest has arrived. It's been 52 weeks, and there is no obstacle ahead. It's like breaking the bank. Let's forge ahead courageously!
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