Sustained growth seen for SGX-listed F&B operators, says expert

Coffee chain Kimly is RHB’s top pick.

The Singapore downstream F&B services sector is expected to benefit from improving consumer demand and better economic prospects this year, according to RHB.

RHB equity analyst Alfie Yeo projected Singapore’s GDP growth to pick up to 3% this year from an estimated 1.5% increase last year thanks to an improving external environment.

“This should translate into more positive consumption and income from the workforce eventually, as domestic industries recover and benefit from a more robust global demand,” Yeo said.

RHB rated the sector “neutral” as the F&B Services Index has already moved past its pre-pandemic levels, buoyed by the strong performance of cafes, food courts and other mass market-focused restaurants with affordable options. 

Coffee chain Kimly is projected to outperform its peers due to continued outlet expansion and a favourable outlook for cafes. 

“[We] prefer more resilient coffee shops over quick-service restaurant format… We expect consumption for coffee shops to remain elevated this year, especially with the recent issuance of $250 Community Development Council (CDC) vouchers,” Yeo explained. 

Meanwhile, the analyst maintained a “cautious FY2025 profit outlook” for Japan Foods as the company is likely to feel the pinch of elevated operating costs and manpower constraints this year.

RHB rated Kimly with a “buy” while kept a “neutral” rating for Japan Foods.