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IPO Chilli Ratings

IPO Chilli Ratings
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Food Innovators Holding Limited

Food Innovators Holdings Limited ("FIH" or the "Company") is offering 14m shares at $0.22 each, for which 13m shares will be through placement and the remaining 1m shares via a Public Offer. The IPO will close on 14 Nov at 12 noon and starts trading on 16 Oct 9am.  FIH has two business models - the first is to be a master lease and sublease the space to other tenants and the second is to operate and manage restaurants.  The Company currently has 12 restaurants in Japan, 10 in Singapore and 4 in Malaysia. The market cap based on the IPO price is around $24.9m. Financial Highlights FIH's revenue grew from $37.8m in FY2022 to $43.8m in FY2024. It is quite funny to see that being a master land lease holder has a higher margin than operating the restaurants, once again illustrating the point that it is better to be a landlord to shake leg and collect rent. According to the prospectus, the PER is around 19x. The Company intends to pay 20% of its net profit after tax a
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Lippo-Mapletree Indonesia Retail Trust



Lippo-Mapletree Indonesia Retail Trust ("LMIR") is a retail reit that comprise of retail malls in major cities in Indonesia.

Public offer: 20m Units at $0.80 per unit.
Placement Offer: 625,469,000 Units at $0.80 per unit.

Assuming a FY2008 payout of 5.84 cents (based on its prospectus) and the IPO price of 80 cents, the yield is 7.3%

LMIR is the first indonesia retail reit offering in Singapore. The first Japanese Residential Reit "Saizen" ended more than 10% lower than its IPO on its debut, it will be interesting to see how this Indonesian Retail REIT performed. The other Indonesian-theme REIT is also by the Lippo Group and is known as First REIT but that is in the healthcare sector with higher yields.

What i think are the risks for investing in this REIT (resulting in me giving it a 1 chilli rating):
(1) Retail sector - will tie to the overall economy of Indonesia
(2) Country - High risk premium for Indonesia. Any Riots or Unrest will affect this sector greatly and you never know when the Indonesian govt may suddent change their policies etc.
(3) Forex risk - Any depreciation of Indonesia Rupiah against SG$ will be detrimental to Unit Holders.
(4) Large float - the float is very large and most likely, all the institutions who want to invest in this REIT will likely be satisfied.
(5) Weak IPO sentiments - Sentiments is hit in recent days and the market is currently not favorable to REITs.

Considering the risks above, i am not sure if the yield of 7.3% for 2008 will attract enough investors as any increase in price post IPO will most likely result in investors cashing out of LMIR and reallocating their assets into lower risk assets with better yields. I will skip this REIT since i am personally not a "REIT" person but the fact that Mapletree is in this REIT may provide some support to the share prices.
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Mr. IPO said…
"I'm very new to this financial industry and will be very grateful if you could give a little more explanation on point (4) below. I don't quite understand what it means =( Really appreciate it. "

Basically what i meant is that the big players who wants to buy the Trust will be able to get their placement allocation and there is no need to buy the shares from the post-ipo market and the price will not 'move up' if big players dont push up the price.
13 November 2007 at 16:50
Mr. IPO said…
"Just wondering, is that common to LMIR only? or is this something that happens to most REITS? or, what is it about LMIR that causes such a reaction from big players?
Thanks."

Hi Michelle, please ask your questions here, easier for me to reply. It depends on the size of the float and the demand for it from institutional investors. In addition, the timing is also crucial to investors. Imagine a REIT launching a REIT at the peak of the property bubble, the owners will be happy to 'cash out' at high property valuation by selling to investors but investors who bought into the REIT at that time may face a decline in value of the properties when the down cycle starts.
13 November 2007 at 22:58
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