Food Empire - Maybank Research 2023-09-01: More Positive After Vietnam Factory Visit

• We visited Food Empire (SGX:F03)’s Vietnam operations on 29-30 Aug 2023 and came away with a more positive outlook for Food Empire.

Sales growth, price increases, new products

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• Food Empire has the third-largest market share of 3-in-1 ice coffee after Nestle and a local brand G7. Food Empire Vietnam targets revenue to grow by 10% annually.
• Overall, we expect Food Empire’s margins to gradually improve after it hikes prices to offset the depreciation of the Russian Ruble.

Growth trend resumes in Vietnam market

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• Vietnam revenue fell to US$49.8m in FY22, but we expect growth of 10-15% in FY23 and 5-10% in FY24 due to resumption of marketing and new product launches in coming quarters, like a premium version (Cafe Pho Gold) of its best-selling coffee.
• One of Food Empire’s new products, Hillway, a bubble tea 3-in-1, has enjoyed good uptake so far. Modern trade is also growing well and currently contributes up to 15-20% of Vietnam revenue from 0% 2-3 years ago.
• All in, we expect contributions from Vietnam to Food Empire to increase by about 25-35% in the next 2-3 years.

Price increases starting in Sep 2023

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Jarick Seet Maybank Research | Eric Ong Maybank Research | https://www.maybank-ke.com.sg/ 2023-09-01 SGinvestors.io

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