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Serious Kopi-o IPO oversubscribed 335 times! Happy days are here again! Altogether now...

EnBloc

Alfrescian
Loyal
http://m.todayonline.com/business/public-tranche-kimlys-ipo-oversubscribed-335-times

Public tranche of Kimly’s IPO oversubscribed 335 times

Published: 10:55 PM, March 17, 2017

SINGAPORE — The public tranche of Kimly’s initial public offering (IPO) on the Singapore Exchange’s junior Catalist board has been oversubscribed by more than 335 times, as investors scrambled to get their hands on the shares of Singapore’s largest traditional coffee shop operator.

Kimly, which counts Temasek Holdings unit Heliconia Capital Management as a pre-IPO investor, had offered 173.8 million new shares at 25 cents each to raise about S$43.5 million in gross proceeds.

“As at the close of the invitation at noon on March 16, there were 14,828 valid applications for the 3,800,000 offer shares available to the public for subscription. These applicants applied for an aggregate of 1,278,122,400 offer shares, with application monies received amounting to approximately S$319.5 million,” Kimly said in a statement on Friday (March 17). This translates to a subscription rate of 336.3 times.

“Of the 170,000,000 shares available for subscription by way of placement, 169,422,000 placement shares were validly subscribed with application monies received amounting to approximately S$42.4 million,” it added. The placement shares that were not validly subscribed for have been made available to satisfy excess applications for the offer shares, it said.

The entire offering was approximately 8.3 times subscribed, the company said.

Mr Vincent Chia, Executive Director of Kimly said: “We are very encouraged by the positive response to our IPO from the investors, and we believe their warm reception underscores the strength of Kimly’s business fundamentals and our future growth potential.”

“We will be focusing on using technology to increase our operational efficiencies as well as to cater to the increasing number of tech-savvy customers, such as providing an online platform to order our food products,” he added.

Kimly, with 26 years of experience, operates and manages a network of 64 food outlets and 121 food stalls across the heartlands of Singapore. It also operates a central kitchen that supplies sauces and semi-finished food products to its food stalls, which enables it to have better control over its business processes and generate cost savings.

Shares of Kimly will begin trading at 9am on Monday.
 

EnBloc

Alfrescian
Loyal
Coffeeshop business is recession proof.

However, that doesn't mean it is low risk because costs management, e.g. rentals, staffing, cost of goods, must be tight, while margins are low with no barriers to entry.

Hence the innovation element was pushed strongly in the marketing of this IPO
 

frenchbriefs

Alfrescian (Inf)
Asset
Kimly Limited IPO - Should You Be Getting This?
There's a new IPO in town and it's not any stranger to most neighborhood folks who have heard of the brand.

Kimly Limited is inviting man on the street to become part of the shareholders by opening a total of 173,800,000 new shares which comprises of 170,000,000 placement and 3,800,000 public tranche at an offer of $0.25 for each share.

About The Company

Kimly Limited operates and manages coffee shops chains as the master leaseholder which then lease these food stalls to tenants.

They operates a total of 64 food outlets, which comprises of 56 coffee shops, 3 industrial canteens and 5 food courts.

They also had a central kitchen where all the activities for the food preparation was done at.

The current occupancy rate was at 98% and they own 5.8% market share of the business.


Financials

Let's first go to see the financials of the company.

The company had a decent cagr growth of 7.6% and 9.9% over the last 3 years. To be frank, this isn't hard to do when they have the cash to operate more food stalls to lease out given their impressive gross and net margins.

The company boasts an impressive gross margins of 21.5% and net margin of 14%. Do note however that profits attributable to shareholders are around 50/50 with the NCI.

We can see that the company operates under a light asset model.

Cash equivalent makes up around 67% of the total assets and that says all about it.

We can also see that cash turnaround trend is also great when they had such a remarkable less receivables and much higher payable on their books.

That says a lot about their business model.


In terms of Cashflow, they are also pretty much cash generative as they have such an impressive free cash flow generated.

Maintenance capex is low and is usually in the form of restoration costs and also some equipment changes.

Comparative Business Model

I've done some analysis on F&B companies in my past articles and draw up some pretty similar stats.

You can view my past articles on Jumbo here and F&B in general here.

Kimly do not operate exactly under the same business model as Jumbo, Sakae, Tunglok and Japan food holdings but what we can see from the latter is that only Jumbo makes the cut outright successful in terms of the numbers. The other 3 has such a difficult time trying to reduce their overhead and increase productivity that their net margin remains low. The latter are also asset heavy which drags their roa and roi numbers downwards.

Perhaps it's better to operate under the Kimly model. It's asset light and cash generative. Though we are unsure if the options to grow are more limited that way.


Valuations

Valuation of the company is at 12x earnings and 5x book value.

I don't think it's the correct way to measure this via book value since they are asset light model so I would measure this via the free cash flow method.

If other F&B companies like Japan Food Holdings can be valued at 20x+ under such a heavy asset model, I think this might be valued higher.

12x earnings would look cheap if the company can grow well over the next 5 years.


My Thoughts

I do not quite understand the need for them to go public when they had so much cash in their book and they are generally cash generative.

I suspect the reason they go public is the need for branding as they are planning to open up an online ordering platform by partnering also with Ubereats and Grabeat.

When they do M&A, branding also plays an important part in tendering process.

With 3.8m shares on the public tranche, investors can expect to get nothing or little. Even if you are lucky, it'll be at most 3 to 5 lots.

I think this will debut well and will be valued much higher at around 18x earnings. I suspect share price would go to as high as 45 cents before settling down around there. With growth to come over the next few years, it might be well worth to see how well it can run from here, though of course execution risk is another matter altogether.

I'll try bidding this for fun and see how it goes. Maybe I can earn some free milk powder money in Mar :smile:
 

scroobal

Alfrescian
Loyal
It has nothing to do with recession proof.

This type of firms and shares attract your mom and pops who have no idea what they are doing. Investment houses and commercial equity research firms have no time for these shares as they know what will happen. Eventually and after the declared period by holding shares by the main shareholder, the company will begin reducing dividends which lead to price going south in a slow manner.

When it hits the "targeted" low price, the primary shareholder's family will be buying up. These cycles will continue and there is no way of touching the family for insider trading. Eventually the buy-back and de-listing and re-listing scenario will occur.

Everyone knows this is not investment grade but for those mom and pops who are day traders. You will see some of them here.

When Sim Wong Hoo did his rights issue there were 2 clear intentions spelled out in the prospectus. First to find their own building in Jurong East and second for him to unload some his holdings shares yet peopl bought in. He of course was a happy man as the shares went south never ever reversing the course.


Coffeeshop business is recession proof.

However, that doesn't mean it is low risk because costs management, e.g. rentals, staffing, cost of goods, must be tight, while margins are low with no barriers to entry.

Hence the innovation element was pushed strongly in the marketing of this IPO
 

frenchbriefs

Alfrescian (Inf)
Asset
It has nothing to do with recession proof.

This type of firms and shares attract your mom and pops who have no idea what they are doing. Investment houses and commercial equity research firms have no time for these shares as they know what will happen. Eventually and after the declared period by holding shares by the main shareholder, the company will begin reducing dividends which lead to price going south in a slow manner.

When it hits the "targeted" low price, the primary shareholder's family will be buying up. These cycles will continue and there is no way of touching the family for insider trading. Eventually the buy-back and de-listing and re-listing scenario will occur.

Everyone knows this is not investment grade but for those mom and pops who are day traders. You will see some of them here.

When Sim Wong Hoo did his rights issue there were 2 clear intentions spelled out in the prospectus. First to find their own building in Jurong East and second for him to unload some his holdings shares yet peopl bought in. He of course was a happy man as the shares went south never ever reversing the course.

SIm wong hoo was a terrible business i agree but i highly doubt it was a pump and dump company,it was the height of the IT bubble,everyone knew IT companies were trading at a ridiculous ratio,of course he was a smart man for cashing out some of his chips......even then his company lasted for 17 years,even though it died a slow dribbling death....but its obviously not a pump and dump scam cause he had the money and assets to sustain for 17 years,despite 14 consequtive quarters of heavy losses,nobody can survive 2o to 30 mil in losses every quarter unless they have some serious cash.
 

congo9

Alfrescian
Loyal
It has nothing to do with recession proof.

This type of firms and shares attract your mom and pops who have no idea what they are doing. Investment houses and commercial equity research firms have no time for these shares as they know what will happen. Eventually and after the declared period by holding shares by the main shareholder, the company will begin reducing dividends which lead to price going south in a slow manner.

When it hits the "targeted" low price, the primary shareholder's family will be buying up. These cycles will continue and there is no way of touching the family for insider trading. Eventually the buy-back and de-listing and re-listing scenario will occur.

Everyone knows this is not investment grade but for those mom and pops who are day traders. You will see some of them here.

When Sim Wong Hoo did his rights issue there were 2 clear intentions spelled out in the prospectus. First to find their own building in Jurong East and second for him to unload some his holdings shares yet peopl bought in. He of course was a happy man as the shares went south never ever reversing the course.


All retail shareholder or punters will be up for slaughter. They are like sheep going to abbatoir.
 

frenchbriefs

Alfrescian (Inf)
Asset
To be honest this isnt much of a public ipo as it is a privatisation.....Considering 170 million shares went to private placements and only 3.8 million went to the public.

They can simply buy the public out since the public hold less than 2 percent.i suspect this is going to be a cash cow.the financials look fantastic.im going to try to buy 20,000 shares on the open market.
 

CoffeeAhSoh

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Loyal
To be honest this isnt much of a public ipo as it is a privatisation.....Considering 170 million shares went to private placements and only 3.8 million went to the public.

They can simply buy the public out since the public hold less than 2 percent.i suspect this is going to be a cash cow.the financials look fantastic.im going to try to buy 20,000 shares on the open market.



it only happened in Singapore .

Only 3.8 million share went to the Public.

Why call it IPO ( Initial Public Offering ) ???

Most Appropriate to call it "Intial Private Offering " since the Bulk of the Offer

170 millions gone to unnamed private placements .


3.8 million is just 2.186 % of 173.8 million.

It is a Mystery why MAS allow this to happen ???
 

CoffeeAhSoh

Alfrescian
Loyal
It has nothing to do with recession proof.

This type of firms and shares attract your mom and pops who have no idea what they are doing. Investment houses and commercial equity research firms have no time for these shares as they know what will happen. Eventually and after the declared period by holding shares by the main shareholder, the company will begin reducing dividends which lead to price going south in a slow manner.

When it hits the "targeted" low price, the primary shareholder's family will be buying up. These cycles will continue and there is no way of touching the family for insider trading. Eventually the buy-back and de-listing and re-listing scenario will occur.

Everyone knows this is not investment grade but for those mom and pops who are day traders. You will see some of them here.

When Sim Wong Hoo did his rights issue there were 2 clear intentions spelled out in the prospectus. First to find their own building in Jurong East and second for him to unload some his holdings shares yet peopl bought in. He of course was a happy man as the shares went south never ever reversing the course.








Mysterious Reporting agin.

Sir i worry for the uninformed investors who jump in to this counter on

listing day .



kimly%2B1.JPG







Kimly announced that its IPO of 173.8m shares were collectively 8.3x subscribed on an overall basis. My back of envelope computation showed that the public tranche was 336x subscribed.


For investors who applied for the public tranche, the balloting table is presented below:

image-759458.png




Investors who applied for 100k shares will have a 2:25 chance of getting 6,000 shares.

The insiders, including the relatives of the founders and Heliconia (via Vanda 1 Pte Ltd) supported the IPO strongly with Vanda 1 subscribing for an additional 27.7m shares in addition to the share it held currently.

"We are very encouraged by the positive response to our IPO from the investors, and we believe their warm reception underscores the strength of Kimly's business fundamentals and our future growth potential. Going
forward, we will be focusing on using technology to increase our operational efficiencies as well as to cater to the increasing number of tech-savvy customers, such as providing an online platform to order our food
products." - Mr Vincent Chia (谢书强), Executive Director of Kimly

Good luck to those who managed to get the shares! Huat ah..

Mr. IPO
 

frenchbriefs

Alfrescian (Inf)
Asset
They release 3.8 million shares cause they don't need the cash.this is not even a ipo,3.8 million out of 1.1 billion shares released to the public.
 

JohnTan

Alfrescian (InfP)
Generous Asset
yes huat ahh...by taking short positions on monday morning 859am and cover the short after lunch. :biggrin:

You would lose your shirt!

On Monday, lots of people would be queuing to buy more Kimly shares! The price will rocket and you will end up like that sinkie actress Jacelyn Tay years ago.
 

CoffeeAhSoh

Alfrescian
Loyal
just finished lunch with my brokers. 9am shorted at 0.53cents. square off all my positions kimly positions - buying at 0.455 cents.
my brokers said will drop below 0.40 cents next few day.
 
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