Demand from Vietnam has also reversed a decline and increased y-o-y due to the group’s marketing efforts, Seet and Ong say.
They also note that gross margins increased from 29.3% to 35.1%, and operating profit surged 67.7% y-o-y to US$34.6 million.
The analysts say that management will be raising prices from next month by 7%-15% and this will be done in two tranches, mainly to combat the impact of a weaker ruble which has depreciated significantly in the past few months.
“We expect softness in revenue and gross profit in 3QFY2023 as these price increases typically take about three to six months to fully take effect but performance should pick up in 4QFY2023,” they add.
Finally, Seet and Ong note that Food Empire has proven its business model to be resilient and has shown a strong performance despite an ongoing war in its core markets.
“We remain confident in management’s execution capability and strong track record. We also believe share-buybacks will continue which should provide good support to the share price,” they say.
As a result, Seet and Ong have raise their FY2023/FY2024 patmi estimates by 5% and
Increased their target price to $1.36, pegged to 11x FY2023 P/E.
As at 4.54pm, shares in Food Empire Holdings are trading flat at $1.05.
