The group has recently announced a placement of $42 million via 17 million treasury shares, priced at $2.52 per share, representing a discount of 5.38% to Sept 23’s volume-weighted average price (VWAP).
The way Yeo sees it, the placement will help to broaden institutional investor base and the additional funding will enable Food Empire to pursue growth opportunities, optimise its balance sheet and reinforce long-term investor confidence. It also helps to monetise its treasury shares, which were bought back from the open market at a net weighted average cost of 90.1 cents.
Food Empire’s share base will increase to 547 million shares as a result. “Based on our computation, our FY2025-FY2026 EPS will be diluted by approximately 2% and 3.4% each,” says Yeo.
“We view this fund-raising exercise as an opportunity to place out shares at a favourable price. Proceeds will be used for working capital, capex and operational needs,” says Yeo, while adding that he expects excess cash to be deployed for more capacity expansion, brand investment initiatives, and possible M&A to drive further growth.
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Growth in the medium term will be driven by more production facilities which will boost sales volume. Malaysia’s snack production capacity expansion was completed in 1H2025. Capacity will increase by 50% and revenue contribution is expected by 3QFY2025.
In Kazakhstan, the group’s first new coffee-mix factory is scheduled to open by FY2025. It will increase its production capacity for coffee mixes by 15%. In Vietnam, a new freeze soluble coffee manufacturing facility should begin operations by FY2028.
Finally, in India, it is expanding its spray-dried soluble coffee manufacturing capacity by 60%. and is scheduled to operate by FY2027. With these growth drivers intact, the group is well positioned for medium to longer term growth.
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“Growth momentum remains strong and revenue continues to be driven by strong demand and sell though in existing markets,” says Yeo.
As at 2.50pm, shares in Food Empire are trading at $2.67.
