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 as dividend. Assuming the EPS is 1.16 cents, the dividend will be 0.232 cents and that translates into an interest rate of 1.05%.
Peers
Listed comparables in Singapore with the Japanese element included Japan Food Holdings and RE&S, and the latter was listed at 22 cents in Nov 2017, only to be privatised by
Southern Capital at 36 cents in May 2024. Japan Food is loss making and trading at rich valuations.
Mr IPO views
I thought the Company has an interesting model where it can either allocate the space to its own restaurants or lease out the space for a margin if it makes more sense to do so. This gives it flexibility to allocate the space that maximises the yield. The Company also operates restaurants serving different cuisine and that allows it to customise the space according to the demographic trends of that area. I do like some of the restaurants owned and operated by the Company.
The concern will of course be the single "country" risk. If you recall what happened in the aftermath of Fukushima, there was a "boycott" of food from Japan due to fear of contamination. In addition, the F&B business is a tough one, where the margins are squeezed due to ever increasing rental, staff and raw materials costs. In this case, there is also an added layer of complexity from the exposure to JPY given the restaurants in Japan.
Besides the sector headwinds, as you already know, our local market is almost dead. Whoever that is trying to list here is playing in the realm of the living dead. While the Company is raising $3.08m in proceeds, only $1.1m is actually for business use, the rest are listing expenses. As such, I don't really see the attractiveness of trying to list here when you can't raise any money for M&A or other uses.
In addition, the Company is already fairly (or richly) valued at 20x PER, so apply for this IPO if you really love the food that FIH serves or if you want to support our SGX.
Happy IPOing
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