As we detailed in our last article, there are compelling reasons to buy stocks with businesses you are familiar with. What you see in the streets, what you talk to your friends and family about, and of course, the businesses that you are actually a customer of.
Singapore is a food paradise. People come from all over the world to savour our local cuisine. Locals regularly travel from one end of the country to the other just to satisfy their craving for a plate of Changi Village Nasi Lemak or Fei Fei Wanton Mee or Roti Prata at Jalan Kayu.
Being the foodies we are, it’s no surprise that we have close to 50 food and beverage (F&B) stocks listed in Singapore, coming from all varieties of businesses that we may have patronized many times without even knowing who owns them.
This is because F&B companies don’t only sell to end-customers like you and me, many time, we consume products of companies that lie within the value chain of the end product.
With Singaporeans being such food lovers, it is to no surprise that F&B stocks perform well even during economic slowdowns. This was the case as the Straits Times reported a decent quarterly earnings for F&B stocks recently.
With this in mind, we thought of highlighting 5 F&B brands that you may already be a customer of, and which you could consider being an investor of as well.
1. Japan Foods Holdings Ltd
- Most famous brands include: Ajisen Ramen and Menya Musashi among many others
Japan Foods is an F&B stock that deals in exactly what its name suggests, Japanese cuisine.
With more than 13 brands, including local household name Ajisen Ramen and Osaka Ohsho, in its stable of over 75 food outlets in Singapore, Malaysia, Vietnam, China and Hong Kong, Japan Foods has the pedigree to continue growing and returning good yields to investors. The Group, which is based in Singapore, has opened its overseas outlets mainly through franchisees and associated companies.
With the Group seeing steady revenue growths and paying out regular dividends, Japan Foods is a stock worth looking at. However, manpower shortage in Singapore is a constraint all restaurant businesses face, and Japan Foods is no exception.
2. Dairy Farm International Holdings
- Most famous brands include Cold Storage and Giant among many others
Dairy Farm operates the Cold Storage, Jasons and Giant supermarkets and hypermarkets in Singapore. Elsewhere, it operates other supermarkets and hypermarkets in Hong Kong, Philippines, Taiwan, China, Vietnam, Indonesia, Malaysia, Macau and Cambodia. It also operates convenience stores, restaurants and health and beauty stores among others.
With established supermarkets and hypermarkets both in Singapore and the region, the Group can be considered a defensive stock. Although not considered a “sexy” stock, defensive stocks provide shelter in recession as its businesses are still patronized at almost the same level as when the economy is good.
- Most famous brands include Gardenia, Bonjour, Farmland among many others
When your mom asks you if you want “bread”, what comes to mind? If it’s the red, white and blue packaging of Gardenia bread, then you should consider investing in this stock (as well as buying its bread).
Besides being an established bread-maker in Singapore, Malaysia, Philippines, Australia and China, the Group is the largest producer of pork in Australia and has various other established businesses including food trading and distribution and food manufacturing.
Operating in daily necessities, this company should be able to withstand economic slowdowns with limited impact to its bottomline.
- Most famous brands include Swensen’s and Gloria Jeans Coffee among many others
This unfamiliar company owns and operates a very familiar brand in Singapore. Swensen.
We’re sure everyone has heard of and, at least a few times in their lives, visited one of their over 20 Swensen’s outlets in Singapore. In addition, it also has other operations in Singapore and the region including the Gloria Jeans Coffee and Season (bakery) brand and other restaurants.
With stable revenue and strong profit growths in the recent years, this company could provide an interesting investment.
- Most famous brands include Breadtalk, Toast Box, Din Tai Fung and Food Replblic among many others
Yes, if you want to invest in this specialty bakery, it’s entirely possible. What you probably didn’t know, is that BreadTalk operates many other familiar F&B brands in Singapore such as Food Republic, Toast Box and even Din Tai Fung (yes the one that always has a long queue). It also has operations in over 16 countries.
Even though the company has come under pressure due to its “fresh” soya bean drink, it has nevertheless been posting good improvements in revenue over the last five years from $303 million in 2010 to $590 million in 2014.
Investing In What You Eat
The F&B sector in Singapore is quite vibrant, and there are over 46 other companies that are related in F&B businesses that we have not covered. This sector, spanning supermarkets and household essentials, can be quite defensive, as people still need to F&B products during economic downturns.
Also, you many have noticed, these companies usually manage or operate many lines of brands and have presence in multiple countries both regionally and globally.
Don’t take our word for it. We suggest you find out more about these companies and other F&B companies before making any investment decision.
Bonds and Fixed Income