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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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Choo Chiang Holdings Ltd.



Choo Chiang Holdings ("CCH" or the "Company") is offering 33.28m shares at $0.35 each. 1m shares will be by public offer and the rest via placement. The offer will close on 27 July at 12pm and starts trading on 29 July. The market cap will be around S$72.8m


The Company has a retail presence in Singapore of over 20 years and is a leading retailer and distributor of electrical products and accessories in Singapore. Some of these products include 3rd party and proprietary brands and they carry eight product categories.

The Company also owns 13 investment properties and 4 retail properties of which 9 of the investment properties are rented out to 3 parties.

Financial Highlights


The EPS as of FY2014 is around Singapore 2.66 cents and that translate into a PER of 13.1x


The revenue is stagnant and margins are declining. 

Competitive Strengths

According to the prospectus, these are the investment merits
  • Wide retail network located across Singapore
  • One stop provider of products and accessories
  • Long term relationship with suppliers
  • Established track record
The Company intends to expand its operations to overseas but i believe it will be challenging.

Shareholders structure


The Company has a simple shareholding structure. Post IPO, the public will hold 16%.

What i like about the Company

  • It is a stable business and the Company has been paying out dividends 
  • The Company intends to pay out 30% of its net profits as dividends for FY2015 and FY2016. If EPS remained about the same, the yield will be around 2% but i am not privy to current year performance.
  • The investment properties will help provide some recurring income. 
Some of my concerns

  • This is a "cashing out" exercise for the vendors. The Company will not received any proceeds. 
  • The Company has a negative cash flow for FY2014 and from the way it looks, it probably leverage up its balance sheet and pay out a bumper dividend of $10.8m prior to the listing.
  • I don't like the fact that a partner of the previous audit firm is now holding a 14% and was the auditor from 1991 to 2015. Potential conflict of interest? 
  • It's a business in decline. The margins are dropping and middle man are gradually being "cut off" globally.
  • It is just a distributor with Singapore-centric business. It will not be easy to expand beyond Singapore.
  • It's a family business. Last count 14 employees who are related.
My Ratings 

I will give this IPO a miss and a 1 Chilli rating. Buy only if you really like it. The business and its prospectus are not too exciting and not scalable beyond Singapore.  It is also a cashing out exercise for the owners. 

I would have given it a zero chilli had it kept all the shares for placement. This is to send a signal that all IPOs should include a public tranche ^_^




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Anonymous said…
what's your guess/view on this choo chiang ipo first day's likely opening price range?!
26 July 2015 at 13:33
Anonymous said…
Poor
27 July 2015 at 22:34
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