Sunday, 14 July 2013

Singapore Kitchen Equipment Limited


Singapore Kitchen Equipment Limited ("SKE" or the "Company") is offering 23m New Shares at $0.20 each of which 2.25m is for the public and the balance 20.75m via placement. The prospectus is here.

The IPO will end on 18 July at 12pm and will list on Catalist. The market cap will be $30m.

Principal business

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.

Financial Higlights


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.

Dividends

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. 

Shareholdings

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 .

13 comments:

Anonymous said...

what about moneymax ipo??

Mr. IPO said...

Haha interesting you brought this up. They are doing book building now at $0.30 each. Saw the fact sheet but I didn't do in depth analysis. Offers better "value" relative to maxi cash. Anyway I put in my orders just to punt the IPO.

Anonymous said...

you going to do a full analysis? please do so, I am looking to buy during the public tranche.

Mr. IPO said...

Later. When it's launched.

Anonymous said...

Mr ipo punting skel?? Allocated placement for this??

Mr. IPO said...

Think will give it a miss. Money all stuck at KrisEnergy

Ashley said...

Mr IPO,

I also put in an order for Moneymax.

What is your view of Rex International, another E&P company? Currently doing a private placement.

Mr. IPO said...

Rex is offering $0.50 and placement book closes today. Again I am not sure but if KrisEnergy debuts strongly on Friday then probably can flip Rex.

Ashley said...

Thanks, Mr IPO.

So you are not putting in an order for Rex International placement tranche?

Mr. IPO said...

Tikam a bit

lzw said...

already diving in its first two hours, by as much as 13%

Mr. IPO said...

Means CIMB cannot make it lor. Anyhow place out ... Mark it in your diary.

William Winston said...

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