UOBKH lifts target price for Food Empire by 14% as H1 results beat expectations

[SINGAPORE] UOB Kay Hian (UOBKH) raised its target price for Food Empire by 14 per cent to S$2.73, from S$2.40, and maintained its “buy” call on the counter as its first-half results beat expectations.

The company on Aug 13 posted top-line growth for H1 ended Jun 30, 2025, on the back of double-digit gains across all its core markets.

“Food Empire delivered strong H1 revenue growth of 22 per cent year on year to US$274.1 million, driven by price gains, higher sales volumes, favourable forex movements and enhanced marketing efforts,” said analysts John Cheong and Heidi Mo in a report on Aug 15.

While the group posted a US$1.5 million Patmi (profit after tax and minority interests) loss from a one-off fair value loss, its core Patmi, which excludes the loss, surged 32 per cent on the year to US$31 million, the analysts highlighted. 

Meanwhile, Maybank Research on Aug 15 reiterated its “buy” call for the group with its target price unchanged at S$2.62, as the research house noted that its H1 results were “in line with… estimates”.

Both Maybank Research and UOBKH highlighted that Food Empire’s maiden interim dividend S$0.03 per share signalled its management’s strong confidence in the group’s growth trajectory and outlook.

Sudeep Nair, group chief executive officer of Food Empire, had expressed an optimistic outlook when the company released its H1 earnings, stating that it was “on track to deliver yet another record-breaking performance in FY2025, barring unforeseen circumstances”.

Moreover, Cheong and Mo noted that Food Empire currently trades at 14.5 times its 2026 forecast price-to-earnings ratio – a “deep 41 per cent discount to its regional peers’ average of 24.7 times”.

Analysts forecast growth, with Vietnam set to lead future gains

With Food Empire’s expectations-beating top-line results for H1, Cheong and Mo raised their 2025 to 2027 revenue forecasts by 4 to 5 per cent.

“We have also lifted gross margin assumptions by one to two percentage points on Food Empire’s successful pricing adjustments across the markets due to higher coffee bean prices. Consequently, our 2025 to 2027 earnings forecasts have been revised upwards by 7 to 13 per cent,” they said.   

Similarly, Maybank Research analyst Jarick Seet predicts that revenue and margins will remain strong for 2025.

“Margins should continue to widen as lower raw material prices gradually factor into costs. With its strong pipeline of projects ahead, we believe Food Empire will continue to grow steadily in coming years. A bonus issue may also be a possibility to improve liquidity,” Seet said.

He expects Vietnam to continue to be the “main growth driver” for Food Empire in H2 2025.

Both UOBKH and Maybank Research observed that the country was the fastest-growing market for H1 2025, driving growth across South-east Asia.

Vietnam contributed to more than 60 per cent of the South-east Asia segment’s revenue and clocked a 36.6 per cent year-on-year revenue surge, driven by robust demand and expanded sales force coverage.

UOBKH highlighted that the combined revenue of the South-east Asia and South Asia markets exceeded the Russia market’s 30 per cent revenue contribution.

“Food Empire believes (that) the leading market position of its brands will sustain the growth momentum of its business as it continues to invest in brand building, product development and marketing to further strengthen its brand equity,” Cheong and Mo said.

India coffee plant expansion, AirAsia tie-up as tailwinds: UOBKH

Food Empire’s expansion of its India manufacturing facility – with its US$37 million investment into an Andhra Pradesh coffee manufacturing plant – is expected to boost its fast-growing branded consumer business, said the UOBKH analysts.

This investment, to be funded mainly through borrowings, is poised to increase the facility’s capacity by around 60 per cent, they said.

They noted that expansion works are set to start in Q4 2025 and complete by end-2027.

Moreover, Food Empire’s tie-up with AirAsia’s parent company Capital A could expand its beverage footprint, they pointed out.

This comes as Food Empire’s unit is co-developing a new line of ready-to-drink beverages with AirAsia, including Vietnamese iced coffee.

The beverages will be served on board the low-cost carrier’s flights, and in regional retail outlets which “will tap millions of consumers and boost brand visibility”, the analysts said.

“The tie-up diversifies Food Empire into the fast-growing ready-to-drink segment, combining its manufacturing and innovation strengths with Capital A’s distribution reach for rapid market entry,” they said.

“It also opens avenues for future co-branded and private-label launches, driving new revenue streams and strengthening brand equity,” they added.