Food Empire

Food Empire: DMG initiates with Buy, TP $0.72. HOuse expect 2012-14F earnings growth to be driven by: 1) Steady growth in existing markets, 2) Expanding gross margins from lower raw material prices namely coffee and sugar as well as 3) Operational efficiencies from higher volumes. Also highlight that the Group intends to expand its reach into Asia via the acquisition of an existing player giving it an instant platform into the market. As at 30 Sep 2012, the Group is sitting on net cash of US $29.8m. Yet to include the potential of inorganic growth into estimates, which wld provide some positive boost to the stock price.