Company Update: 23 May 2025
Brewing a growth recipe in Asia
- Continued strong growth in Asia. Food Empire experienced a sustained increase in sales across its core markets in 1Q24, showcasing continued strong consumer demand for the company’s products, especially in the Southeast Asia and South Asia regions, which continued to see growth of over 30% in 1Q25. The group continues to reap the benefits of its brand-building efforts in Vietnam, increasing its market share across the Vietnamese market, with revenue growing 44.6% YoY. This has significantly boosted Food Empire’s Southeast Asia revenue contribution, taking the top spot and contributing to 29.2% of the group’s total sales in 1Q25. Demand for the group’s products in South Asia also remains strong amidst a coffee consumption boom in the region.
Expanding production capabilities across Asia
Food Empire is significantly expanding its production capabilities across Asia to meet growing demand. In Vietnam, a new freeze-dried soluble coffee facility is set to begin construction by late 2025 and become operational by 2028, bolstering its ingredients business. Meanwhile, its Malaysian snack manufacturing facility will increase output by about 50% by the third quarter of 2025 after an expansion is completed in the first half. Outside Southeast Asia, Food Empire’s first coffee-mix plant in Kazakhstan is expected to be finished by the end of 2025, boosting overall coffee-mix capacity by approximately 15% and extending its reach into Central Asia. These strategic expansions are set to drive continued top-line growth across its key Asian markets.
1Q25 Business Updates
Food Empire Holdings reported higher revenue of US$136.6mn for 1Q25, up 16.3% YoY, compared to US$117.5mn in 1Q24, led by strong growth in its Southeast Asia and South Asia markets, which saw a growth of 33.8% and 31.7% respectively. The company’s markets in Ukraine, Kazakhstan and CIS experienced growth of 14.6% YoY, while the Russian market saw a slight increase in revenue of 0.5% YoY. The company experienced revenue growth across all key markets, demonstrating robust consumer demand despite increased prices due to higher raw material costs and ongoing global geopolitical tensions.
Valuation & Action
We maintain an OUTPERFORM recommendation and increase our TP to S$1.95, based on a Discounted Cash Flow (DCF) valuation, with a terminal growth rate of 2% and a WACC of 10.0%, representing an upside of 10.1%.
Risks
Food Empire remains exposed to currency risk due to its broad geographic footprint, which includes key markets such as Russia, Ukraine, Kazakhstan, Vietnam, and India. Heightened geopolitical tensions—most notably the ongoing Russia-Ukraine conflict—have led to further depreciation of local currencies such as the Russian ruble and Ukrainian hryvnia against the U.S. dollar. Additionally, the sustained high interest rate environment in the U.S. has strengthened the dollar relative to many of the currencies in which the Group operates.
