$Food Empire (F03.SG)$ Lim & Tan report on Food Empire. Food...

Lim & Tan report on Food Empire.

Food Empire is currently exploring a proposal to seek a dual primary listing of its ordinary shares on the Main Board of The Stock Exchange of Hong Kong Limited (the "SEHK"). Based on its initial assessments and findings, the Board believes that a dual primary listing will potentially be beneficial to the Company as it provides the Company with access to two equity markets in Singapore and Hong Kong, a more diverse investor and shareholder base and additional sources of fund raising.

Food Empire Holdings is capitalized at SGD598 million and trades at 9x FY23 forward PE ratio and price to book ratio of 1.6x. Based on last year's SGD0.044 cents dividend payout (40% payout ratio), dividend yield is 3.9%. The stock has done very well this year, way outperforming the market by rising 78% (against a flattish STI) and based on Bloomberg consensus 1 year tp of SGD1.45, potential 12-month return is about 28.3%.

Their check from Bloomberg shows that management's claim of comparable fast moving consumer goods companies does indeed trade at higher PE multiples averaging near 15x despite the weakness in Hong Kong and China broad stock indices. However, they also note that those comparable companies have way bigger sales, profit and market capitalization compared to Food Empire and have different end market exposures compared to Food Empire which counts Russia/Ukraine/ Vietnam as key end market exposures for their end customers. Finally, they also note that the stock has done very well this year (already up 78% versus a flattish STI index) and further out-performance may be subject to the successful listing in Hong Kong.