RHB’s small cap Asean research team reckons that Food Empire is a steal. 

“At a market valuation of 10x FY21F P/E, Food Empire is one of the cheapest consumer staples stocks,” explains analyst Jarick Seet in a Feb 8 note.

He believes the counter could even be a candidate for privatisation, given its undervalued position.

By comparison, the food manufacturer’s peers are trading at 20 – 30x P/E, says Seet who is maintaining a strong ‘buy’ call on the counter but at a revised target price of $1.27.

This is up 47 cents from his previous 80 cents call and is believed to be give a 44% upside from its 88 cents close on Feb 5.

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“The worst is over,” explains Seet. “Due to Covid-19 and mass distribution of vaccines, we expect demand for Food Empire’s products to grow,” he adds.


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This is unlike FY2020 when the food manufacturer’s sales had taken a hit for almost two months after strict lockdowns were imposed across the markets it operates in.

However, Seet notes that the management has “learnt to solve these problems and does not expect such matters to be repeated”.

While FY2020 revenue had inched down y-o-y across the markets, he observes that they have “improved robustly” on q-o-q basis, since 2QFY2020 ended June. Excluding foreign exchange costs, he says that the company would have recorded an impressive earnings growth of 87% q-o-q.

Seet anticipates demand for Food Empire’s products to be resilient in its last quarter ended in December as well as in FY2021.

He is expecting its recurring PATMI (profit after taxes minus interest) to edge up by 10%, 20% and 5% between FY2020 to FY2022.


SEE: Food Empire receives SGX query after share price closed 18.1% higher


Seet is also looking at the company maintaining its FY2020 final and special dividend per share of 2 cents, which will translate to an FY2020 yield of 2.6%.

These estimates were arrived at after applying a discount to account for the fluctuation in the value of the Russian Rubble (RUB) which had increased at the end of November 2020. Seet believes this can benefit the group’s numbers, even though it can negate the effect by adjusting its selling prices.

The way he sees it, the key risks to this is strict lockdowns causing operational disruptions and a sharp depreciation in the RUB and currencies of other countries it has operations in.

As at 11.25am, shares of Food Empire were up 4 cents or 4.57% to 91.5 cents.