To this end, Tng believes Vietnam is “likely to shine” in Food Empire’s FY2024 results with the company identifying the Southeast Asian nation as a key growth market.
“We expect Food Empire to provide further updates on its plan for Vietnam when FY2024 results are released. We note that for 9MFY2024, Southeast Asia/South Asia were the fastest growing segments for Food Empire, with revenue growing 30.6% y-o-y/28.3% y-o-y, respectively, amid strong growth in Vietnam,” he writes.
As such, the analyst is expecting to see higher revenue from Food Empire’s Southeast Asia market in FY2024, which confirms the company’s success in reducing its dependency on its biggest market, Russia.
With Food Empire’s intention to grow its food ingredients business and operations in Vietnam, Tng expects the company to declare an ordinary dividend per share (DPS) of 5 cents as his base case scenario, or 5.34 cents otherwise. The analyst, however, does not expect any special dividend as he thinks the company intends to conserve cash for growth.
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Tng’s higher target price comes after rolling over his valuation for FY2026 based on an unchanged P/E multiple of 11.2 times and 1 standard deviation (s.d.) over the company’s five-year mean from FY2019 to FY2023.
Food Empire is expected to release its FY2024 results on Feb 26.
Shares in Food Empire closed 1.5 cents higher or 1.53% up at 99.5 cents on Jan 17.
