Food Empire Holdings is exploring a stock-market listing in Hong Kong to give the Singapore snacks and drinks business broader access to funding.
Listed in Singapore since 2000, the city-state-based company’s board of directors has given approval to look into listing its shares on the main board of the Stock Exchange of Hong Kong, although no application has yet been made, with the objective still in the “preparatory” stage.
“Based on its initial assessments and findings, the board believes that a dual primary listing will potentially be beneficial to the company as it provides the company with access to two equity markets in Singapore and Hong Kong, a more diverse investor and shareholder base and additional sources of fund raising,” Food Empire said in a local exchange filing yesterday (16 October).
“The consumer sector that the company operates in is among the top-performing sectors in Hong Kong’s capital markets,” the owner of the Kracks and Chizzpa crisp brands added.
Food Empire also supplies regular and flavoured coffee mixes, chocolate beverages and fruit teas, under brands such as Klassno and NutriRite cereal drinks.
The business operates eight factories in five countries and serves markets across Asia, North America, the Middle East and Eastern Europe, according to its website. It also operates in food ingredients.
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“The board also believes that the proposed dual primary listing has the potential to increase the liquidity of the shares, enhance shareholders’ value and further enhance the company’s corporate profile and visibility in the international markets as the company seeks inorganic growth opportunities globally,” Food Empire said in the filing.
However, the company added a cautionary note, stating there is no guarantee an application will be made for a Hong Kong listing nor that it will materialise.
Food Empire issued its first-half results in August in US dollars, showing the business also generates revenue in Russia and Ukraine.
Group revenue to 30 June rose 11.8% to $198.3m but net profit after tax dropped 1.6% to $26.6m.
In Russia, sales revenue amounted to $70.6m, up 23.6%, and $49.5m in Ukraine, Kazakhstan and other CIS countries, an increase of 20%.
Food Empire as a group posted EBITDA of $41.2m, climbing 8% from the corresponding period, while operating profit rose 67.7% to $34.6m.
Its gross margin increased 580 basis points to 35.1%.
Food Empire said in its results commentary: “The global economy continues to grapple with inflationary pressure on food and fuel prices, debt vulnerabilities and supply chain issues resulting from the geopolitical tensions in some of the group’s key markets.
“While inflation seems to have peaked, it remains higher than most central bank targets.
“The group remains cautious of the economic outlook for Russia and Ukraine due to [the] volatile geopolitical situation and weakening Russian ruble but expects consumer demand to remain steady.”