Food Empire Holdings F03 has been buying back shares actively. The company was most active on May 30 when it acquired 200,000 shares at $1.011 each. This brings the total number of shares bought back under the current mandate to 1.27 million, equivalent to 0.2386% of the total share base.
Food Empire, which produces instant beverages and snacks for emerging markets, also bought back shares on six days between May 17 and May 29.
With the exception of May 18 when the company bought back 70,000 shares, Food Empire bought back 200,000 shares on each of the remaining days, paying between $1.02 and $1.044 for each share.
In its 1QFY2023 ended March business update on May 11, Food Empire reported earnings of US$13.8 million ($18.7 million), up 50.9% from US$9.2 million in 1QFY2022. Revenue was up 24.2% to $102.6 million. Net profit margin was up 2.4ppt to 13.5%.
Interestingly, the company recorded the fastest turnover growth in two markets which are at war with each other. Sales to Russia in 1QFY2023 were up 44% to US$38 million while sales in Ukraine, Kazakhstan and the rest of the former Soviet republics were up 52.2% to US$25.5 million.
Food Empire warns that as the geopolitical situation in Europe remains uncertain, it may experience forex volatility. The company says it will continue to monitor economic and political developments closely and implement strategies to mitigate the negative effects.
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Nearer home, Food Empire plans to step up advertising and promotion activities in Vietnam. The company notes that demand for its potato chips remains strong, especially from private-label customers.
Citing the company’s positive outlook and undemanding valuations, Jarick Seet of Maybank Securities kept his “buy” call and $1.29 target price on the stock, which is based on 11 times estimated earnings for the current year.
Growing halal segment
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Following its FY2023 earnings report, Japan Foods Holdings has been steadily buying back its own shares even amid low overall trading volume. The most recent was on May 29 when the company acquired 58,000 shares on the open market at 43.5 cents each. This brings the total number of shares bought back under the current mandate to 732,800 shares, equivalent to 0.42% of the total share base.
On May 25 and 26, the company, which operates a chain of multi-branded restaurants, acquired 45,000 shares at 43 cents each and 110,000 shares at 43.5 cents each respectively. On May 23, Japan Foods reported earnings of $4.1 million in FY2023 ended March, up 27.7% from $3.2 million in FY2022. Revenue in the same period was up 43.8% y-o-y to a record $78.5 million.
Japan Foods attributes the better showing to generally higher sales across its various outlets, the addition of new brand concepts and most importantly, strong momentum from its outlets catering to the halal segment. The halal segment contributed around a third of the company’s total revenue in FY2023 versus around a quarter in FY2022.
Executive chairman Takahashi Kenichi says its decision to focus on the halal market as the new growth segment has been validated. “We will continue to refresh our brand portfolio by regularly introducing new brands and rejuvenating existing ones while assessing each brand’s performance by location so that we can manage our restaurant portfolio to achieve the best results,” he adds.
As at March 31, the company operates 65 outlets on its own in Singapore and three restaurants as joint ventures. It has 17 outlets across China and Indonesia through associates, and operates one outlet in Malaysia as a sub-franchisee.
In his May 29 note, RHB Bank Singapore analyst Shekhar Jaiswal is keeping his “buy” call on the stock, along with a higher target price of 65 cents from 60 cents previously, after raising his earnings estimate for FY2024 and FY2025 by 8% and 9% respectively. He lauds the company’s all-time-high revenue which came in ahead of his expectations although earnings came in within expectations.
