Company Coverage
Food Empire Holdings (FEH SP): Business As Usual In Russia; Share Price Weakness, Potential Market Share Gain And High Short Position Present Buying Opportunities
BUY (Maintained)
Current price:
Target price:
Upside:
S$1.95
S$3.49
79.0%
Analyst
Analyst
Highlights
- FEH clarified that its operations and investments in Russia remain unaffected by the recent measures against one of its peers.
- The disruption to its peer’s coffee business could allow FEH to gain market share, while FEH’s Singapore base reduces the risk of asset confiscation.
- A short covering of its huge short position of >10m shares and more aggressive share buyback are near-term catalysts. FEH trades at an attractive 12.5x 2027F PE, below peers’ 20x. Maintain BUY and target price of S$3.49.
Analysis
- Business as usual in Russia. Food Empire Holdings’ (FEH) share price corrected 10% on 21 Sep 26 following news that Russia had seized the assets of Swiss-owned Nestlé and French retailer Auchan, which it described as “European companies from unfriendly countries”. On the same day, FEH released an announcement clarifying that its Russian operation are continuing as usual. Investment in marketing initiatives and brands have also continued. FEH has been operating in Russia for more than 30 years and has manufactured locally since 2006. To recap, Russia contributes around 30% of FEH revenue.
- Share price correction overdone; market has not priced in positive potential of market share gain. We believe the share price correction is overdone and presents a good buying opportunity, given that the news has no impact on FEH's business. On the contrary, there could be positive implications for FEH if its competitor's operations faces disruptions.
- FEH’s position as a Singapore-based company reduces political risk. On the political front, while European leaders generally isolate Moscow diplomatically, Singapore leverages its position to engage. PM Lawrence Wong’s meeting with President Vladimir Putin at the Jun 26 ASEAN-Russia Commemorative Summit in Kazan was described as the first high-level exchange between the two nations since 2018.
- Potential short covering of huge short position; more positive signaling. A potential short covering of the huge outstanding short position of 10.6m shares (based on MAS’s 11 Sep 26 data), equivalent to around 5% of FEH’s free float, could be a near-term positive catalyst for FEH’s share price. In addition, more aggressive share buyback could be another positive catalyst. FEH has increased the amount of share buyback since 21 September.
Highlights
- FEH clarified that its operations and investments in Russia remain unaffected by the recent measures against one of its peers.
- The disruption to its peer’s coffee business could allow FEH to gain market share, while FEH’s Singapore base reduces the risk of asset confiscation.
- A short covering of its huge short position of >10m shares and more aggressive share buyback are near-term catalysts. FEH trades at an attractive 12.5x 2027F PE, below peers’ 20x. Maintain BUY and target price of S$3.49.
Analysis
- Business as usual in Russia. Food Empire Holdings’ (FEH) share price corrected 10% on 21 Sep 26 following news that Russia had seized the assets of Swiss-owned Nestlé and French retailer Auchan, which it described as “European companies from unfriendly countries”. On the same day, FEH released an announcement clarifying that its Russian operation are continuing as usual. Investment in marketing initiatives and brands have also continued. FEH has been operating in Russia for more than 30 years and has manufactured locally since 2006. To recap, Russia contributes around 30% of FEH revenue.
- Share price correction overdone; market has not priced in positive potential of market share gain. We believe the share price correction is overdone and presents a good buying opportunity, given that the news has no impact on FEH's business. On the contrary, there could be positive implications for FEH if its competitor's operations faces disruptions.
- FEH’s position as a Singapore-based company reduces political risk. On the political front, while European leaders generally isolate Moscow diplomatically, Singapore leverages its position to engage. PM Lawrence Wong’s meeting with President Vladimir Putin at the Jun 26 ASEAN-Russia Commemorative Summit in Kazan was described as the first high-level exchange between the two nations since 2018.
- Potential short covering of huge short position; more positive signaling. A potential short covering of the huge outstanding short position of 10.6m shares (based on MAS’s 11 Sep 26 data), equivalent to around 5% of FEH’s free float, could be a near-term positive catalyst for FEH’s share price. In addition, more aggressive share buyback could be another positive catalyst. FEH has increased the amount of share buyback since 21 September.
BUY (Maintained)
Current price:
Target price:
Upside:
S$1.95
S$3.49
79.0%
Analyst
Analyst
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