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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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LHN Logistics Limited


LHN Logistics Limited ("LHN Logistics" or the "Company") is placing out 25.238m shares at $0.20 each via placement. The offer will close on 27 April at 12 noon and starts trading on 29 April 9am. The market cap based on the IPO price is around $33.54m. As there is no public offering, I will cover the Company briefly.

Principal Business

LHN Logistics is a "spin-out" from the LHN Limited, a company dual listed on both Catalist in 2015 and Mainboard of SEHK in 2017. LHN Logistics has two principal business segments - namely transportation and container depot services. According to the prospectus, the Company covers Singapore, Malaysia and Thailand, has a fleet of 430 vehicles with a strong relationship with its top 5 customers that is decade-long. It is Singapore's leading ISO tank logistics and transport service provider with 27,200 TEUs across 4 container depots. This is not your "last mile" delivery but more specialised transportation using movers and trailers as well as requiring specialty skill sets in chemical transportation. 


For those interested to know the workflow, the prospectus has provided an illustration of how it works.


Why Invest In LHN Logistics Limited (per the gatefold in the prospectus)


Financial Performance


According to the prospectus, the post placement EPS (based on 167.678,800 shares) is 1.98 Singapore cents for FY 2021. Using the IPO price of 20 cents and including the service agreement is in place, it will translate into a PER of 11.2x. 

Dividend Policy

The Company intends to recommend and distribute dividends of not less than 40% of its Group's profit attributable to equity holders for FY2022 (less listing expenses), FY2023 and FY2024

Assuming the EPS remains the same for FY2022, the dividend per share will be 40% x 1.98 = 0.792 Singapore cents. That will translate into the yield of around 3.96%. A range of 3-4% seemed reasonable. 

Future Prospects

The Company is confident of its prospects and outlook for the business for the next 12 months due to the following factors:
  • robust recovery in the global tank container fleet despite covid-19
  • promising growth prospects for Singapore's chemical industry
  • Singapore's role as a leading logistics hub with strong government support for the sector
  • Singapore's position as the world's busiest container transhipment port
  • expected increase in manufacturing activities within the ASEAN region
Mr IPO views

Mr. IPO received some shares from the Placement Tranche so have to do more analysis to satisfy himself that this IPO is worth a "punt". Here are some of the additional analyses for your reference. My pure gut feel is a decent debut of 10-20% given the small issuance size. Anything above 20% will be a nice bonus. 
  • Revenue projections for the logistics business seemed fine
I managed to get the KGI research report where the header was "FY22 set to outshine FY21" and an Outperformance rating was maintained for the listed company.

I agree that the spin out makes sense for LHN Limited, otherwise this division under the real estate  management service group will not get the "spotlight" that it needs to raise capital. In the forecast (see below) you can see that the Logistics business is expected to grow to $28.52m in FY2022

Source: KGI Research Report dated 23 Dec 2021

If you look at the cash flow statements, it is pretty cash flow generative and should be able to support the dividends promised
  • Rumoured to have a strong anchor and sellers are not "desperate" 
As you can see from the prospectus, the Company is profitable and cash flow generative. They are part of a listed company hence not really "desperate for cash". I don't know  who the anchor investors are but given the market sentiments, it is a good outcome that the IPO price eventually landed at 20 cents, which was lower than the initial indication of 22-24c. Given the seller is not "desperate", it also reduces the issuance size from the intended 24-26% to 15%.  I didn't get my full allocation either. 

Let's see who the anchor investors are, when the placement result is announced but the IPO price of 20 cents definitely made this issuance more attractive for investors. 
  • Weak IPO sentiments and small cap status
The thing that is working against the IPO will be the performance of the recent IPOs where iWoW tech and Oiltek are now trading below the IPO prices despite a decent "debut" on day 1. Probably makes sense to "run road" for small investors while the sun is shining (on the first day). Having some strong hands for this issuance will definitely help!

Source: Shareinvestor.com





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