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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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Synagie Corporation Ltd


Synagie Corporation Ltd ("Synagie" or the "Company") is offering 43m shares at $0.27 each, whereby 39.2m will be via placement and 3.8m shares through the public offer. The IPO will close on 6 Aug 2018 at 12pm and starts trading on 8 Aug 2018. The market cap at the IPO price is $70.7m

Principal Business

According to the prospectus, the Company is Singapore's fastest growing e-commerce start up and one of the fastest in Southeast Asia.


Synagie provides e-commerce solutions in the Body, Beauty and Baby "BBB" Sector and help brand partners execute their E-commerce strategies though cloud-based platform that leverages on technology such as Cloud Computing, Big Data Analytics and Artificial Intelligence. There are 3 main business lines:


For the first time, the business model for this e-commerce company is not difficult to understand. You can see how the 3 main businesses "integrate" with Synagie in the picture below.



Investment Highlights


The key investment highlights are presented above. 

Financial Highlights


The pro-forma revenue is $12.2m with loss of $2.3m. My own gut feel is that the Company will need at least 2 years to break even.

What I like about the Company
  • Large untapped market potential - There is a large untapped market potential in South East Asia for e-commerce
  • Scalable business model - The business model is highly scalable as all brand holders (especially those with offline stores) would like to expand the model to online without cannibalizing the offline stores  
  • Ability to attract good brand partners - The Company seemed to be able to attract branded BBB products owners to collaborate. My key concern is whether the Company can expand beyond BBB products into higher margin "tech" products where Insurtech for e-commerce is more common and profitable
  • Interesting shareholders - Despite the long list of pre-ipo investors, there are some familiar faces such as Centurion Private Equity (Loh and Han) and Alan Wang. Let's see if they are able to help support the company post listing. 
  • Big 4 auditor - Deloitte is the auditor for the Company and it is good to see they have invested in a good set of auditors
Some of my concerns
  • Execution risk - The key to the Company is how they execute their strategies beyond the inflection point from Singapore into the region 
  • Long list of Pre-IPO investors - The Company has been financing its operations from outside investors. The pre-ipo investors (as shown on page 76 of the propsectus) is a long list of around 135.3m shares and owns 51.7% of the Company. There might be selling pressure when the moratorium is over after 6 and 12 months
  • Company still loss-making - Despite the revenue growth and acquiring a profitable Insurtech business, Synagie is sitll loss making. Investor will have to be patient as the Company grow its revenue at the expense of profitability
  • Staff costs is high - The 2 key founders, Clement and Olive are quite well paid for a start-up company (They are both in Band B). Contrast the staff cost of $2m (page 98) against its gross revenue of $8m (page 95) means that the Company would need to accelerate its revenue even faster to break even
My Comments

I have previously shared with you that i don't really know how to rate IT companies. hahaha. I rated one of its competitors, Y Ventures, here with a one chilli. It debut well on the first day, then tanked for a few weeks to a low of 15c before it start moving up. One year on, it is >100% above its IPO price.


The morale of my story - the chilli ratings can be right in the near term and very wrong in the long term (or it can be right all the way 😆). So always do your own homework. In any case, Y ventures was profitable at the point of listing but Synagie is not.

Chilli Ratings

On one hand, i feel that the local investors (including myself) do not know how to appreciate "loss-making internet based companies" and the poor market sentiments is not helping. On the other hand, i feel that the Company is well positioned to tap the e-commerce market space but investors will have to be patient.

Similar to Y ventures, I will give it a one chilli for the debut (probably zero if i wasn't vested 😅) and whether it can become another Y ventures will be the story for the future.

Happy Synaging!

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