Kimly aims to raise $40m in first kopitiam IPO
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Kimly is in line to become the first operator of traditional coffee shops to be listed in Singapore. The company – reported last month as eyeing a listing – tabled its initial public offering yesterday. It is offering 173.8 million new shares at 25 cents apiece, comprising 170 million placement shares and 3.8 million shares for the public.
The offer closes at noon on March 16, with trading expected to start on the Catalist board on March 20.
Kimly is a household name for its “kopitiams” offering food and beverage. It has nearly 500 stalls across 64 outlets – 56 coffee shops, five food courts and three industrial canteens.
The network includes 121 stalls that carry the company brand, selling dim sum, seafood zi char and mixed vegetable rice, among other things. These are managed under the company’s food retail division.
The rest of the stalls are leased to tenants paying rent and management fees that go to Kimly’s outlet management division. This division accounted for around 57 per cent of Kimly’s total revenue last year.
The business is highly resilient, with strong cash flows and healthy earnings growth, executive director Vincent Chia said yesterday.
“We are in a defensive industry that serves a very fundamental market need. This is really a grassroots business – everyone can walk in and have a nice meal at a very affordable price. We don’t talk about income brackets,” he added.
And despite its size, Kimly only commands a 5.8 per cent market share, “so we have plenty of room to grow”, said Mr Chia.
Kimly’s revenue expanded from $148.9 million in 2014 to $172.2 million last year – a compound annual growth rate of 7.6 per cent.
“And despite its size, Kimly only commands a 5.8 per cent market share, “so we have plenty of room to grow”, said Mr Chia.”
Net profit racked up compound annual growth of 9.9 per cent over the same period to hit $24.2 million last year, implying a price-to-earnings ratio of 12.02 for the stock, while cash flow from operating activities remained steady, from $21.8 million in 2014 to $28.4 million in 2016.
Cash and bank balances amounted to $29.4 million last year, with no outstanding borrowings.
“We intend to pay out no less than 50 per cent (of net profit) for dividend,” said Mr Chia.
He said the listing will not lead to food price hikes, aside from the usual inflation-related adjustments.
Kimly is looking to raise about $40.4 million of net proceeds from the IPO, with the bulk earmarked for potential acquisitions and joint ventures, with a focus on adding more offerings to its brand. Some funds will also be used to boost productivity, with plans to expand its central kitchen to double the capacity.
“Last November we launched online delivery service for our dim sum, something that we’re looking to extend to more products. We may be kopi boys, but we are forward- thinking kopi boys,” said Mr Chia.
Questions & Answers
Q.What is the primary use for the net proceeds Kimly expects to raise from its IPO?
What is the primary use for the net proceeds Kimly expects to raise from its IPO?
The bulk of the net proceeds, approximately $40.4 million, is earmarked for potential acquisitions and joint ventures. This is aimed at adding more offerings to the company's brand.
Q.How does Kimly generate revenue from its various stalls?
How does Kimly generate revenue from its various stalls?
Kimly generates revenue from its food retail division, which manages 121 company-branded stalls. Also, its outlet management division leases the remaining stalls to tenants who pay rent and management fees.
Q.What percentage of Kimly's total revenue did the outlet management division account for last year?
What percentage of Kimly's total revenue did the outlet management division account for last year?
The outlet management division, which leases stalls to tenants, accounted for around 57 per cent of Kimly’s total revenue last year. This highlights its significant contribution to the company's income.
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