31-10-2017, 09:40 PM
JAPANESE restaurant group RE&S Holdings has filed a preliminary prospectus for a Catalist listing as it seeks to raise capital for new outlets. See link below for preliminary prospectus:
http://www.sgx.com/wps/wcm/connect/a38bc...d377355726
1) It boasts a portfolio of 20 brands in 77 restaurants/stores. Upon closer inspection, most of its stores are either Ichiban, or Kuriya Japanese Market (fresh food retailer). Most of the remaining brands being found in their 4 Shokutsu Ten Japanese-themed food court, with the rest having 1 (Kuishinbo) or 2 stores (Shimbashi Soba). There is no revenue breakdown by brand, but it is stated that 74.4% of it is from full-service restaurants. So most of the revenue likely belongs to Ichiban, where investors should pay more attention to.
2) The balance sheet has $16.1m of debt, $15.1m of which is secured against their central kitchen and office building in 32 Tai Seng Street. Instead of paying down its debt, a total of $19.9m was paid out as dividends to shareholders, $4m of which was just paid out earlier this month. As a result, equity is reduced from $31.5m in FY15 to $25.5m in 1Q18, while debt-to-equity increased from 26% to 64%.
Pre-IPO dividend history
FY15: $1.96m
FY16: $1.96m
FY17: $12m
2 October 2017: $4m
3) RE&S received $1.7m-$1.8m in other income from FY15-17. During the same period, net profit to shareholders ranged from $2.9m to $5.9m. These other income consists of grants from WDA (wage credit scheme), SPRING (productivity-related and IE. If we remove this item from the net profit, you can see that the margin is pretty thin.
Net profit (and margins) to shareholders adjusted for other income
FY15: $4.1m (3.12% of $131m revenue)
FY16: $1.2m (0.88% of $135m revenue)
FY17: $3.8m (2.71% of $140m revenue)
The shares will likely be overpriced. But it will be interesting to see how many (vendor) shares will be sold.
http://www.sgx.com/wps/wcm/connect/a38bc...d377355726
1) It boasts a portfolio of 20 brands in 77 restaurants/stores. Upon closer inspection, most of its stores are either Ichiban, or Kuriya Japanese Market (fresh food retailer). Most of the remaining brands being found in their 4 Shokutsu Ten Japanese-themed food court, with the rest having 1 (Kuishinbo) or 2 stores (Shimbashi Soba). There is no revenue breakdown by brand, but it is stated that 74.4% of it is from full-service restaurants. So most of the revenue likely belongs to Ichiban, where investors should pay more attention to.
2) The balance sheet has $16.1m of debt, $15.1m of which is secured against their central kitchen and office building in 32 Tai Seng Street. Instead of paying down its debt, a total of $19.9m was paid out as dividends to shareholders, $4m of which was just paid out earlier this month. As a result, equity is reduced from $31.5m in FY15 to $25.5m in 1Q18, while debt-to-equity increased from 26% to 64%.
Pre-IPO dividend history
FY15: $1.96m
FY16: $1.96m
FY17: $12m
2 October 2017: $4m
3) RE&S received $1.7m-$1.8m in other income from FY15-17. During the same period, net profit to shareholders ranged from $2.9m to $5.9m. These other income consists of grants from WDA (wage credit scheme), SPRING (productivity-related and IE. If we remove this item from the net profit, you can see that the margin is pretty thin.
Net profit (and margins) to shareholders adjusted for other income
FY15: $4.1m (3.12% of $131m revenue)
FY16: $1.2m (0.88% of $135m revenue)
FY17: $3.8m (2.71% of $140m revenue)
The shares will likely be overpriced. But it will be interesting to see how many (vendor) shares will be sold.