Triple Catalysts: How Record Revenue, Cheaper Coffee Beans, and a Bonus Issue Make FOOD EMPIRE a Top Pick

Food Empire Holdings (FEH) reported a record quarter for 1Q26, pulling in roughly US$160 million in revenue. In response, analysts from both DBS Group Research and UOB Kay Hian have maintained a "BUY" rating. Their underlying analyses and target prices—SGD 3.65 from DBS and SGD 4.21 from UOB Kay Hian—reveal different ways of valuing FEH whose primary business is instant coffee beverages retailed under its award-winning MacCoffee and CaféPHỐ brands “Food Empire is off to a good start in FY2026 with our strongest-ever first quarter revenue performance. We are cautiously optimistic that the growth momentum will carry through the rest of the year barring unforeseen circumstances. "Today, the combined revenue from Asia has surpassed our traditional markets and this is the result of our strategic geographical diversification and continuous investments in brand building and capacity expansion projects since FY2013.” -- CEO Sudeep Nair (with Executive Chairman Tan Wang Cheow)

DBS analyst Zheng Feng Chee views Food Empire as an "under the radar Middle East conflict beneficiary".

He points out that an "improved macro environment and stronger currencies in oil economies like Russia and Kazakhstan" will "support sustained strong volume and price-led growth".

Potential M&A

"Based on the terms of the Ikhlas investment and management’s indication that the founder (Mr Tan, Executive Chairman) is open to monetising his stake, we believe both Ikhlas and management are actively working towards a potential monetisation event by Nov 2029, when the Ikhlas convertible bond matures." -- Zheng Feng Chee, analyst

This dynamic fueled strong double-digit growth in 1Q26, including a 29% year-on-year revenue surge in Russia and a 36% jump in Central Asia.

The analyst focuses on a "series of corporate actions to unlock value" mainly around private equity firm Ikhlas Capital's investment in FEH.

He foresees a potential monetization event, noting that "both Ikhlas and management are actively working towards a potential monetisation event by Nov 2029, when the Ikhlas convertible bond matures".

He adds this "could materialise through the entry of a strategic investor or a potential full takeover of the company."

Analysts John Cheong and Heidi Mo take a much more operational view.

In 1Q26, "Asia revenue surpassed traditional markets for the first time, marking an inflection in FEH’s geographic mix and payoff of its diversification strategy".

They argue that because of this milestone, "FEH should be viewed increasingly as an Asian F&B platform with vertical integration".
 

Furthermore, they highlight "margin tailwinds from retreating coffee prices," noting that robusta coffee has plummeted 43% from its February 2025 peak due to recovering production in Vietnam.

(It's a lucky break but FEH has demonstrated in the past when the price of raw materials took the wrong direction that it had pricing power — an ability to raise prices without losing market share).

UOB is also bullish on FEH’s capacity expansion with "four factories underpinning the next growth leg" coming online sequentially across Kazakhstan, Malaysia, India, and Vietnam.

Despite their different focuses, both brokerages agree the recently announced 1-for-5 bonus issue will enhance trading liquidity and could drive a positive valuation re-rating.

FEH already has seen strong re-rating on business growth -- and as UOB notes, the company has returned a cumulative S$228.5 million to shareholders over 2021-25 through dividends and share buybacks.

→ See also:Why CGS Sweetened Food Empire's Target Price to S$4.00