There is a lot of attention swirling around technology stocks as the generative artificial intelligence hype kicks in.
Investors are also swooning over software-as-a-service stocks displaying fast revenue growth.
If you are searching for another dependable sector, you can turn to the food and beverage segment.
These companies supply food, necessities, snacks and meals to customers and although the business may not be exciting, it is highly cash-flow generative and most of them also pay steady dividends.
We introduce five reliable food-related stocks that you can consider adding to your buy watchlist.
ST Group Food Industries (SGX: DRX)
ST Group Food (STGF) holds the exclusive franchise and licence rights to internationally popular brands such as PappaRich, Nene Chicken, Gong Cha, Hokkaido Baked Cheese Tart, IPPUDO, and iDarts, in various countries.
The group operates in the key markets of Australia, New Zealand and the UK.
STGF released a strong set of results for its fiscal 2023 (FY2023) ending 30 June 2023.
Revenue jumped 40.1% year on year to A$65.8 million.
Net profit clocked in at A$2 million, significantly higher than the A$81,457 chalked up a year ago.
The restaurant franchise owner generated a positive free cash flow of A$7.4 million for FY2023, up 55.7% year on year.
STGF had a total of 164 outlets as of 30 June 2023.
The group will be opening a new PappaRich and Nene Chicken outlet in New South Wales Australia next month.
This will be followed by another five outlets (of various brands) opening in both Australia and New Zealand in November and four outlets in December.
Old Chang Kee (SGX: 5ML)
Old Chang Kee, or OCK, produces and sells a wide variety of delectable fried snacks.
The group is well-known for its signature curry puff and sells items such as fried chicken wings, spring rolls, and fish balls.
OCK reported a respectable set of results for FY2023 ending 31 March 2023.
Revenue increased by 15.9% year on year to S$89.8 million while gross profit improved by 17% year on year to S$58.3 million.
Net profit rose 8.4% year on year to S$6.2 million.
Free cash flow also jumped by 21.3% year on year to S$21 million.
A final dividend of S$0.01 per share was declared, similar to a year ago.
OCK, however, faces inflationary pressures as raw material, labour and utility costs keep rising.
The group has also reduced its outlets due to infrastructure development at various locations but is actively seeking to increase outlets at key transport nodes.
Soup Holdings (SGX: 5KI)
Soup Holdings operates a chain of Chinese restaurant outlets in Singapore under the name of “Soup Restaurant”.
For the first half of 2023 (1H 2023), revenue rose 9.6% year on year to S$20.8 million.
Net profit climbed 25.3% year on year to S$1.4 million.
Soup Holdings generated a positive free cash flow of around S$4.4 million for 1H 2023.
The group plans to expand into new concepts as well as rejuvenate and reposition the brand to keep it relevant and distinctive.
In its food processing business, Soup Holdings will widen its distribution network and also manufacture and export its bottled sauces overseas.
Japan Foods (SGX: 5OI)
Japan Foods operates a chain of Japanese restaurants such as Ajisen Ramen, Osaka Ohsho, and Fruit Paradise.
As of 30 June 2023, the group had 67 outlets around Singapore.
For the first quarter of fiscal 2024 (1Q FY2024) ending 30 June 2023, Japan Foods’ revenue rose 13% year on year to S$21.3 million.
Gross profit increased by 12.4% year on year to S$17.9 million.
Net profit, however, plunged by 84.5% year on year to S$211,000 due to higher selling and distribution expenses.
The group’s balance sheet remained robust with S$18 million of cash and no debt.
Although Japan Foods expects the next 12 months to be challenging, the group will continue to explore new brands and locations to drive revenue growth.
In July this year, the group launched a new brand “Godaime” that specialises in dry ramen.
A 120-year-old brand, Tori Sanwa, that serves Nagoya Chicken Rice Bowl, was launched in August 2023.
The group has also expanded its halal-concept restaurants from just one in November 2020 to 29 as of 30 June 2023.
JB Foods Ltd (SGX: BEW)
JB Foods, or JBF, is a cocoa ingredients producer with operations spanning Asia-Pacific, Europe, West Africa and the US.
The group has a cocoa bean processing capacity of 180,000 tons per year and produces cocoa mass, cocoa butter, and cocoa powder.
For 1H 2023, revenue edged up 8.7% year on year to US$271.2 million with gross profit surging by 66.3% year on year to US$30.5 million.
Net profit rose 15.5% year on year to S$8.4 million.
In line with the good results, JBF declared an interim dividend of S$0.002.
The group sees an improvement in cocoa consumption with border reopenings.
However, the remainder of 2023 is set to be volatile as inflation causes cocoa bean prices to rise.
JBF is confident that cocoa consumption will be supported by a growing middle class and the recovery of economies post-pandemic.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
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