3Q08 above expectations. Food Empire Holdings Ltd's (FEH) 3Q08
results were ahead of expectations. Revenue grew 41.4% YoY to US$61.6m
while gross profit improved 47.5% to US$30.5m. Net profit, however, rose by a smaller 17.0% to US$6.3m as high operating expenses incurred for the launch of its new product packaging took some shine off its sales acceleration. As a result, net profit margin slipped by 2.1ppt YoY to 10.3%
despite a 2.1ppt improvement in gross profit margin to 49.5%.

But declining Ruble could dampen earnings. Although Russia led the
pack with the strongest growth in revenue, this segment could also cost
the group translation losses arising from unfavourable forex movements.
The Ruble has weakened by ~9% against the USD YTD (exhibit 1), and
the forward market suggests that it could drop by as much as 22% by the
end of 2009 and 33% by the end of 2010.

Cautious outlook, but still a BUY. Fair Value: S$0.48