“We expect demand to remain strong in Russia and the CIS region and strong growth from Vietnam. Spray dry and new freeze dry coffee plants in India continue to operate at full capacity but should yield higher margins due to cost reductions on freight cost normalisation,” say Seet and Ong.
“Corporate share buy-backs have also been consistent and will likely resume after the blackout period given it has just renewed its mandate,” say the analysts.
The group has been buying back shares from the open market at higher prices than before of over $1.01. The analysts expect this to continue as management concur that the company is deeply undervalued and remains confident of its outlook.
“We also expect interim dividends to be a possibility in the near future due to its strong cash flow generation and strong balance sheet,” say Seet and Ong.
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At this point, shares in Food Empire are trading at an undemanding 8.6x FY2023 P/E, which the analysts believe is still a steep discount despite its strong recent share price performance, compared to the valuations of its private and listed global peers.
“As such, we think that it could be an attractive target for bigger competitors given its strong presence in Russia and Vietnam,” say the analysts.
As at 2.40pm, shares in Food Empire are trading at 97 cents, up 49.2% ytd.
