$Food Empire(F03.SI)$   (FEH)

General Outlook

Food Empire's stock has done very well, rising from 65 cents at the start of the year to $1.07 recently. The market looks persuaded that Food Empire's business of selling 3-in-1 coffee is resilient. It has proven its management's execution capability with its strong track record.

On top of its strong quarterly results, Food Empire has been buying back its shares frequently and paying dividends, and can be expected to continue to do so. Further share buybacks would support the stock price.

Dual listing in SG & HK

With its recent announcement of its interest in dual-listing the stock in HK, management hopefully can make a strong case why this is positive for shareholders given the lukewarm reception that other SG listings have experienced when they ventured into HK. This dual listing would provide access to two equity markets, a more diverse investor and shareholder base, and an additional source of fund raising.

The board also believes dual listing could increase the liquidity of the shares, boost shareholder value and enhance FEH's corporate profile and visibility in international markets as FEH is seeking inorganic growth opportunities globally.

Recent depreciation of the Ruble might crimp the results

Despite the Russia-Ukraine war, demand is expected to remain strong in its core markets (CIS nations and Vietnam) and margins to improve in FY24 as it raised prices by 7-15% during Sept 2023 to counter the Ruble's depreciation.

Management increased marketing in Vietnam, where there are encouraging signs of growth. Prices have been raised by 7-15% in two tranches, mainly to counter the impact of a weaker Ruble, which has depreciated by 30% since a year ago.

Softness in revenue and gross profit in 2H23E is expected, as it typically takes about 6 months for price increases to take effect. But performance should pick up in 1Q24E.

With analysts' TP ranging from $1.25 to $1.69, I would say this stock seems bullish and is worth taking a look.