The IPO will end on 18 July at 12pm and will list on Catalist. The market cap will be $30m.
The Company was founded in 1996 and is a leading Singapore-based commercial and industrial kitchen solutions providers for the F&B and hospitality industry.
It currently markets the Qson brand of kitchen equipment and clients include Jumbo Group of Restaurants, Ah Yat, Soup Restaurant, Pu Tien and Hard Rock.
The revenue has been growing slowly from $15.1m in FY2010 to $16.6m in FY2012. The net profit grew from $749k to $2.237m (excluding one off gain) during the same period.
Assuming the service agreement has been in place in FY2012 and removing off all the one off gain, the net profit will come in at $1,874,740. The EPS will be around Singapore 1.25 cents. That translate into a historical PER of around 16x. Not exactly good value if you ask me.
The Company intends to distribute at least 40% of its net profit for the next 3 years. Assuming recurring EPS of 1.25 x 40% = DPS of 0.5 cents, the dividend yield will be around 2.5%. That is probably quite achievable given the stability of the business.
The husband and wife team will hold around 54% of the company with another executive director holding 27%. The public will hold around 15%. As such, the free float is extremely small.
My Views and Ratings
This is a small cap company in a very niche segment. Some of its clients like Soup Restaurant is listed but trading at 11x PE. One of the independent director Eugene Wong is pretty well connected within the F&B Segment as he sits on Japan Food, Neo Group etc and his fund invested in the Paradise Group as well.
In my view, the historical valuation is pretty expensive at 16x PE unless the company can scale up its profitability post listing. The low IPO price of $0.20 and the low free float would probably mean that share price can be supported if placed out to strong hands. I will give it a one chilli rating and kudos to CIMB who at least let the public has some chance to invest in the Company if they want .