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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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Singapore Institute of Advanced Medicine Holdings Ltd


Singapore Institute of Advanced Medicine Holdings Ltd ("Sam" or the "Company") is offering 114m new shares comprising 4.415m Public Offer Shares and 109.585m Placement Shares at $0.23 each for a listing on Catalist. 

The Company aims to raise $26.2m and the majority of the proceeds will be used to repay debt and the balance for working capital. The market cap based on the IPO price is $231.8m and the offer will close on 14 Feb at 12 noon and starts trading on 16 Feb 2024 at 9am.  

Principal Business

SAM is a healthcare service provider using advanced technology for early and accurate diagnosis to detect and treat cancer, neurodegenerative and cardiovascular diseases.  SAM has strategic collaborations with public and private institutions for research and clinical work. 


SAM's goal is to create a comprehensive one-stop ambulatory cancer centre to undertake the challenges to fight cancer and is one of the first to adopt proto beam therapy treatment in Singapore.


Financial Performance

The Company is loss making for the last 3 years, with the latest revenue of $16.2m and loss of $18.9m, meaning that it can't even generate sufficient revenue to cover its operations. According to an article in the Edge, the construction was delayed for 3 years and only managed to start operations from Biopolis centre from June 2023.


Looking at the details of the financial and using $16m revenue as the focal point, the bulk of the cost went to employee compensation of $11.6m, finance cost of $2.4m, repair and maintence of $3m and medical consultancy fees of $2.8. The non-cash depreciation expense is around $5.7m.   

The NAV per share before the IPO is around Singapore 5.03 cents.


Valuation

The loss per share or FY2023 is around 1.47 cents. The NAV per share is 10.33 cents versus the IPO price of 23 cents. 

In terms of valuation, it is super expensive. Even the large hospitals such as Raffles Medical Group are profitable and trading at high PER whereas SAM is loss making and it reminded me of Clearbridge Health Limited (given it was partly owned by Clearbridge - See pages 131-132 of the prospectus).

What I like about the Company
  • One-stop ambulatory cancer centre with advanced technology - SAM intends to create a centre that specialise in advanced treatment of cancer 
  • Beneficiary of medical tourism - SAM can benefit from Singapore reputation as a medical hub for foreigners seeking cancer treatment 
Some of my concerns
  • Loss making company with technology not widely adopted yet - the Company has been loss making for the last 3 years and it started the Biopolis operations only from June last year. It is hard to imagine why this Company deserves a market cap of $231m when it has yet to prove its operational capabilities or the profitability
  • Regulatory obligations and technological advancements - The Company is operating in a highly regulated industry and SAM's proton beam therapy was approved by MOH only in June 2023. The Company will need to keep abreast of the latest regulations and technology to remain competitive 
  • Capital intensive business - The cancer treatment equipments are highly capital intsensive and may require further financing if the Company wants to expand to new locations or beyond Singapore
Recommendation

The IPO market in Singapore is still in the doldrums (longkang), so to seek listing against this backdrop is to say the least, very courageous (or desperate). Having said that, the amount raised is not huge, considering that it has the Berjaya Group as its parent. 

This IPO is probably not for the faint hearted as the Company is relatively new and has yet to prove that it is a viable business. Even if you are super bullish about the healthcare sector, it might be better to observe if this Company has a viable business model before investing.

For locals Singaporeans who go for health screenings regularly, you will probably stick with the government hospitals as healthcare here is heavily subsidized. In this regard, the market or area of growth for SAM will most likely be the rich foreigners who can't avail themselves to the subsidized healthcare system in Singapore.

If the share price chart of Clearbridge is of any reference, it will be wise to avoid this for the long term.  I will give it a one chilli rating since it is so courageous to even offer for public subscription but I wish there are better companies seeking listing here to help rejuvenate our dying IPO market...

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