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One Company Highly At Risk in Ukraine and Russia

Within a short month or two, Ukraine and Russia have become the most talked about nations in the world due to the latter’s military intervention in the former.

While the two countries might seem so remote and unrelated to what’s going on in our lives here in Singapore, there is actually a Singapore-listed company that does the majority of its business in both Russia and Ukraine.

The company in question is Food Empire (SGX: F03), a manufacturer and distributor of instant coffee mixes, frozen convenience-food, and snacks. Within Singapore’s stock market, Super Group (SGX: S10) is another company that’s involved in much the same lines of business.

In fact, there are many similarities between the two companies. For instance, both operate in the same segment and both have been growing quite rapidly over the past decade: Sales at Food Empire increased by 88% from S$140 million in 2003 to S$263 million in 2013 while Super Group’s revenue grew by 287% from S$144 million to S$557 million.

Yet, there is also a fundamental difference between the two. Super Group is currently a S$2 billion dollar company being valued at 3.5 times sales and operates mainly in Asia with a focus on expanding in China. Food Empire on the other hand, is only a S$218million company valued at 0.8 times sales with its key markets being Russia, Ukraine and Kazakhstan.

Russia is currently Food Empire’s largest market, providing more than 50% of the company’s total revenue with Ukraine occupying the second spot. It might come as a surprise for some, but Food Empire’s MacCoffee brand of instant coffee is actually the most famous brand of such products in Russia, even outselling brands from consumer product giants like Nestle and Kraft (NASDAQ: KRFT).

Who are the characters involved?

Mr. Tan Wang Cheow and Mr. Sudeep Nair, the founder and current CEO of Food Empire, respectively, are both major shareholders of the company and collectively control almost 30% of the company as of 15 March 2013.

It’s also interesting to note that Food Empire is considered an associate company of the Salim family, one of the richest families in Indonesia and the main shareholders of the Singapore-listed palm oil outfit Indofood Agri Resources (SGX: 5JS).

Foolish Summary

Food Empire is definitely facing huge operational risks now with its businesses located right smack in the centre of one of today’s biggest international confrontations. Whether they are able to weather through this storm will be anyone’s guess.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim owns Food Empire.