Singapore's largest traditional coffee shop operator marked a stellar debut on the Singapore Exchange, or SGX, with shares trading 120 percent above its initial public offer (IPO) price on debut.
As well-caffeinated senior executives stood side by side for the ceremonial banging of the gong at the commencement of SGX trade, the gathered crowd hollered and applauded in surprise as the stock surged to S$0.55 Singapore cents, well above its S$0.25 cents offer price.
"We are heartened by the reception that we have received for our IPO and look forward to further enhance and grow our operations to reward our shareholders," said Kimly Limited Executive Director Vincent Chia.
"With our listing, we now reach out to an even bigger market who can partake in the flavors of Kimly not only as customers but also as our shareholders."
Kimly issued 173.8 million new shares, representing 3.8 million offer shares for 25 cents each and 170-million placement shares for the same price.
The Temasek Holdings unit Heliconia Capital Management was a pre-IPO investor in the chain via its agreement with Vanda 1 Investments. The ICH Gemini Asia Growth Fund, managed by ICH Gemini, was also an investor. The two funds collectively hold 25-million conversion shares in the company, representing 2.17 percent of its post invitation share capital.
Chasing growth
Kimly was founded by its Executive Chairman Lim Hee Liat with several of his friends in 1990.
After more than 25 years in business, it now operates a network of 64 outlets, which include 56 coffee shops, three industrial canteens and five food courts in Singapore.
Its core business is outlet management and food retail, and it has recently ventured into online food ordering and delivery services. Its latest results show the company generated S$172.2 million in revenue, while profit attributable to owners was S$24.0 million in FY16.
The company also generated an operating cash flow of S$28.3 million in FY16, representing 16.4 percent of its total revenue.
Management also intends to pay dividends of not less than 50 percent of its net profits attributable to shareholders.
Kimly intends on using the proceeds of its IPO to increase the total number of outlets it operates via acquisitions, expand the company's online presence and offerings on online food delivery services platforms, expand range of food products in its Food Retail Division and increase automation and use of technology in its operations to boost efficiency and productivity.
SGX appeal
The listing of Kimly brings the total number of Consumer companies listed on SGX to more than 150, with a combined market capitalization of about S$160 billion.
"We are very excited to welcome Kimly, one of the largest and most recognizable coffee shop operator chain in Singapore," said Mohamed Nasser Ismail, head of Equity Capital Market and head of Capital Market Development at SGX.
"The listing of Kimly provides investors with an avenue to invest in Singapore's growing food and beverage sector," he added.
SGX hosts 11 restaurant and three food retail stocks with a combined market capitalization of about S$20.0 billion. Collectively, the 14 stocks have averaged a total return of 9.8 percent in the year-to-date.
The three strongest performers in the YTD were LifeBrandz, Dairy Farm, and ABR Holdings, according to the SGX.
"Singapore's F&B industry is a substantial contributor to the domestic economy and the contribution is increasing due to rising affluence, GDP and population growth, increased popularity of food delivery services," the SGX said in a statement.
It comes as the SGX puts forward a series of proposals aimed at improving retail investor participation in the market. From May 2nd 2017, it will mandate that all mainboard IPO companies allocate at least 5 percent, or $50 million, whichever is lower, of their offer size to retail investors.