(FEH SP / F03.SI)
Reactive playbook validated; model resets to a steadier, capacity-led growth path
Food & Beverage
Revenue rose 15.0% to US$315.1m and normalised NPAT increased 12.2% to US$35.3m. Russia (+24.6%) and Central Asia (+33.6%) led broad-based regional growth, while gross margin held at 33.0%.
The revised sales forecast lifts FY26F revenue 1.4% to US$651.7m after anchoring to reported 1H26 but lowers FY27F/FY30F by 4.2%/7.6%. We now allow RUB/KZT translation to normalise and align growth with capacity timing.
Khorgos contributes from 2H26, India adds c.60% capacity by end-2027 and Vietnam is due in 2028. Meanwhile, promotion, receivables and capex compressed operating margin and drove conventional FCF to negative US$4.1m in 1H26.
We reiterate our OUTPERFORM rating with a S$3.186 12-month DCF target (10% WACC, 2% terminal growth), implying 35.0% upside from S$2.36. Although the target is c.14.1% below the unadjusted S$3.70 headline, it is 3.3% above the bonus-adjusted prior target.
Key downside risks include RUB/KZT depreciation, robusta-cost pressure, over-broad promotions, conflict-driven freight and energy inflation, slower India/Vietnam execution, weaker South Asia profitability, and terminal-value sensitivity.
