In addition, Food Empire could focus on consolidating its brand and market share gains in FY2027. Tng notes that the group’s Vietnam revenue grew by 36% y-o-y in FY2024, with management targeting for a growth of at least 32% y-o-y for FY2025.
Even though efforts to build its brand presence and expand market share has temporarily depressed its net margins for Vietnam, reported under its Southeast Asia segment, revenue for Food Empire’s Vietnam market may grow at a more “manageable” 15% over FY2026 and FY2027. At the same time, the group’s net margins for this particular market may normalise as its brand building efforts moderate.
See also: Analysts more confident on DFI’s Retail prospects following recent inaugural investor day
Given this, Tng has increased his overall gross margin assumption by 0.75 percentage points for FY2027, leading to a 5.1% increase in his earnings per share (EPS) estimates for the same financial year.
The analyst has maintained his “add” call with a higher target price of $3.09, from $2.94, the second increase in two months. Tng had increased his target price to $2.94 from $2.73 in an Aug 13 report after Food Empire’s 1HFY2025 results.
The new target price, resulting from the higher FY2027 EPS estimate, is based on an unchanged 3 standard deviations (s.d.) and an FY2027 P/E of 17 times.
To Tng, Food Empire should consider a bonus issue to improve its trading liquidity. “Year-to-date, we note that three SGX-listed small caps have announced bonus issues, including Oiltek International Ltd whose three-month ADTV (average daily trading volume) quadrupled from $0.28 million pre-bonus issue, to $1.15 million post the bonus issue,” the analyst notes.
As at 9.19am, shares in Food Empire are trading 1 cent higher or 0.38% up at $2.67.
