Food Empire - Maybank Research 2024-02-28: And Now For The Cream On Top

• Food Empire (SGX:F03) logged another record financial year with core NPAT surging 25.3% to US$56.5m while revenue rose 6.9% to US$425.7m in FY23, driven by stronger demand from markets like CIS, SEA and South Asia.
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Back-to-back record years and more to come

• Food Empire's FY23 revenue grew steadily by 6.9% y-o-y to US$425.7m due to strong demand from its CIS, SEA and South Asia markets which grew y-o-y by 21.1%, 9.6% and 24.1%, respectively. Gross and net margins also improved to 33.2% from 29.8% a year ago and 13.3% from 11.3%.
• Going forward, the non-dairy creamer expansion could potentially add US$20-40m of revenue in the next 1-2 years with a net margin of between 8-10%. In addition, demand from core markets remains strong which should drive revenue growth of 5-10% consistently y-o-y.
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Record dividend S$0.10 – 7% FY23 yield

• Management declared a record dividend of S$0.10, made up of ordinary dividend of S$0.05 and a special dividend of S$0.05 per share, up 250% from S$0.04. See Food Empire's dividend dates.
• We think that this level of dividends is sustainable if performance continues to improve as, even at S$0.10 per share, it represents a 70% NPAT pay-out ratio.
• Food Empire has a strong net cash balance sheet and generates strong operating cash flow which makes the possibility of continuing to reward shareholders with more dividends more likely.

Share buybacks likely to continue

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Jarick Seet Maybank Research | Eric Ong Maybank Research | https://www.maybank-ke.com.sg/ 2024-02-28 SGinvestors.io

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