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Singapore Exchange (SGX) welcomed Koufu Group Limited to its Mainboard under the stock code "VL6"
Started back in 2002, Koufu Group Limited is one of the most established operators and managers of food courts and coffee shops in Singapore, with a presence in Macau.
Koufu has diversified revenue streams from its two key business segments:
1) outlet and mall management business, under which it operates and/or manages food courts, coffee shops, a hawker centre and a commercial mall; and
2) F&B retail business, under which it operates F&B stalls, kiosks, quick-service and full-service restaurants.
The Group's brands include Koufu, CookHouse, Rasapura Masters, Gourmet Paradise, The Kitchen, Fork & Spoon, 1983 A Taste of Nanyang, Happy Hawkers, Elemen, Grove, 1983 Coffee & Toast, R&B and Supertea.
With a market capitalisation of about S$350 million, Koufu Group Limited's listing will boost SGX's consumer cluster to a total of 152 listings with combined market capitalisation of more than S$135 billion.
Koufu Group Limited opened at S$0.65 today.
IPO price : S$0.63 per share.
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$95m of dividends paid to owners over the past 3 years. $30m of proceeds to vendors from sale of shares. A total of $125m from past 3 years, without including salaries. The founders are ready to retire.
Proposed central kitchen, central dishwashing, corporate office, and dormitory costing $40m. To be financed by $40m+ of IPO proceeds.
Same old pattern of squeezing cash out of the company, and using funds from new shareholders to fund new initiatives.
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19-07-2018, 10:36 AM
(This post was last modified: 19-07-2018, 10:36 AM by Big Toe.)
That's right. Other wise why would they want to get listed?
Cheap source of funding for expansion + cashing out + Higher valuation + higher profile as a listed co.
The only realistic hope for the new shareholder is for the management to have enough skin in the game to have the interest aligned.
Sharing their past accumulated wealth with the new shareholders is wishful thinking. Applies to all newly listed companies, especially the smaller ones and the family owned ones.
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(18-07-2018, 09:05 PM)karlmarx Wrote: $95m of dividends paid to owners over the past 3 years. $30m of proceeds to vendors from sale of shares. A total of $125m from past 3 years, without including salaries. The founders are ready to retire.
Proposed central kitchen, central dishwashing, corporate office, and dormitory costing $40m. To be financed by $40m+ of IPO proceeds.
Same old pattern of squeezing cash out of the company, and using funds from new shareholders to fund new initiatives.
Koufu sold $40m of Investment Properties, $20m of Financial Assets and other assets (another 1$6m) during the pre-IPO period to its immediate and ultimate holding companies.
Presumably the large dividend ($85m) declared and paid for FY17 is to help the immediate and ultimate holding companies finance those purchases?
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19-07-2018, 05:19 PM
(This post was last modified: 19-07-2018, 05:43 PM by karlmarx.)
(19-07-2018, 11:09 AM)r0n Wrote: (18-07-2018, 09:05 PM)karlmarx Wrote: $95m of dividends paid to owners over the past 3 years. $30m of proceeds to vendors from sale of shares. A total of $125m from past 3 years, without including salaries. The founders are ready to retire.
Proposed central kitchen, central dishwashing, corporate office, and dormitory costing $40m. To be financed by $40m+ of IPO proceeds.
Same old pattern of squeezing cash out of the company, and using funds from new shareholders to fund new initiatives.
Koufu sold $40m of Investment Properties, $20m of Financial Assets and other assets (another 1$6m) during the pre-IPO period to its immediate and ultimate holding companies.
Presumably the large dividend ($85m) declared and paid for FY17 is to help the immediate and ultimate holding companies finance those purchases?
Most likely. In other words, the assets were transferred from pre-listed company to founder's company. This is actually good for post-IPO investors, since the company will be easier to value (with a cleaner balance sheet), and hence more likely to have a higher valuation.
However, this shows that Koufu did not really need to sell shares to finance its expansion plans; it will have had enough from the sale of its investment properties.
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(19-07-2018, 10:36 AM)Big Toe Wrote: That's right. Other wise why would they want to get listed?
Cheap source of funding for expansion + cashing out + Higher valuation + higher profile as a listed co.
The only realistic hope for the new shareholder is for the management to have enough skin in the game to have the interest aligned.
Sharing their past accumulated wealth with the new shareholders is wishful thinking. Applies to all newly listed companies, especially the smaller ones and the family owned ones.
Certainly Mr Pang Lim and co will not let the business fail.
But now that he has more than $100m of assets (possibly even), will he be more or less motivated to grow the business, compared to the past?
Some folks are less hungry after they amassed wealth that they know is more than what they will ever need. Some folks have an insatiable hunger for ever more.
If Mr Pang Lim belong to the latter type, maybe buying at present valuation will be a good idea. But since he is selling out, in terms of the sale of vendor shares, and the dilution as a result of new shares issued (which as previously explained, the company did not actually need to raise capital), I am more inclined to think that he is now less hungry than before.
Of course, this does not mean that Koufu shares has a poorer propensity to rise. Markets are capable of sending the valuation of its darlings to the moon.
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Koufu Attracts Strategic Investor Through Married Deal at IPO Price of S$0.63 per Share
* Albizia Capital Pte. Ltd. took up 20.0 million shares through a married deal, representing 3.6% of Koufu’s issued and paid up shares
* Two founders remain fully committed to Koufu with a combined shareholding of 77.10% following transaction
* In line with Group’s strategy to expand network in F&B space through investor
More details in http://infopub.sgx.com/FileOpen/Koufu_Ne...eID=541160
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Koufu Enters Into Joint Venture to Expand Supertea and R&B Tea Brands in Indonesia
* Maiden entry into the Indonesian F&B market, with an initial focus in Jakarta, in line with Koufu’s growth strategy to expand into new markets
* First outlet in Indonesia slated to open in 3Q 2019
Koufu Group Limited (口福集团有限公司), today announced that its subsidiary Super Tea (S) Pte. Ltd. has entered into a joint venture agreement to expand the Supertea and R&B Tea brands into Indonesia, in line with its plans to enter new geographical markets for growth.
The Group will have an effective stake of 32.4% in the JV Co through its subsidiary, Super Tea (S) Pte. Ltd., which will hold 54% interest in the JV Co. The remaining shares will be held by its partners, including A&O Assets Sdn Bhd (“A&O”) and Ms Chan Bee Kiew, who hold 40% and 6% respectively.
There are 17 R&B Tea outlets and a Supertea outlet in Singapore as at 30 June 2019. Koufu has also established its first R&B Tea and Supertea outlets in Macau and is in active talks to expand both brands into other markets such as Malaysia and the Philippines.
More details in :
1. https://links.sgx.com/FileOpen/Koufu_JV%...eID=567022
2. https://links.sgx.com/FileOpen/Koufu_New...eID=567025
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11-08-2021, 07:50 AM
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Was wondering if Koufu's new big factory at Woodlands + the growing trend for food delivery may bring about a flywheel for Koufu's business. Can't imagine one after thinking about it for a few days. My thoughts on the company:
Koufu's business of managing food courts and operating F&B retail points (restaurants, kiosks, stalls) is a fairly ordinary business. Competition is all around. Customers are price-sensitive.
Three defining characteristics of its business are:
1) Food court management (sub-leasing) seems to be a low capital requirement and consequently high return business. Koufu's ROE for FY2019 was 27%;
2) Multiple retail formats - which provide a wider revenue base for greater stability, more room for growth, and cost economies of scale; and
3) Vertical integration (from central kitchen to retailing) - which improves cost-efficiency.
A constant eye on business fundamentals, continuous improvements, low costs and prices are key - so that the business can be highly efficient. Koufu's growth over ~20 years from one food court to a network of F&B retail points across Singapore shows there are such qualities in Koufu's family-led management team.
Nonetheless there appears to be no distinctive competitive advantages or which can be imagined that can spur exponential business growth. Business growth is likely to be linear, driven by retail network expansion. An attractive valuation to pick up the stock would likely be less than 8x PE on a stable earnings level. (2019 net profit of $28M x 8) + (assume free cash of $40M) = $0.47/share.
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