Kimly Limited: Financial Analysis and Investment Recommendation

Business Description

Kimly Limited is one of the largest traditional coffee shop operators in Singapore with over 30 years of experience. The Group operates an extensive network of 86 food outlets, 176 food stalls, 11 Tonkichi and Tenderfresh restaurants, and 4 Tenderfresh kiosks across Singapore. They manage central kitchens that supply sauces, marinades, and semi-finished food products to their stalls, which allows for better control over business processes and cost savings [[5]].

Industry Position and Competitive Landscape

Kimly operates within Singapore’s food and beverage industry, which faces challenges such as economic uncertainties, rising operating costs, and a tight labor market. Despite these challenges, Kimly has expanded its food outlet network and is looking to grow in the Halal market. The company’s competitors are other local and international F&B operators. Despite increased competition, Kimly has a strong position in the market due to its extensive network and diverse offerings [[4]].

Revenue Streams and Customer Base

The company’s revenue streams are divided into three main segments: Food Retail, Outlet Management, and Outlet Investment Business. The Food Retail Division reported a revenue increase, reaching S\$185.0 million, driven by new food stalls and restaurants [[2]]. The Outlet Management and Outlet Investment Business Divisions also saw growth. Their customer base includes patrons of their coffee shops and online delivery customers.

Financial Statement Analysis

The financial report for FY2024 shows a slight revenue increase of 1.8% to S\$319.4 million, while net profit after tax attributable to owners declined by 6.8% to S\$31.7 million [[1]]. The EBITDA remained relatively stable. The company proposed a final dividend of 1.0 Singapore cent per share, totaling 2.0 Singapore cents per share for FY2024, representing a 75% payout ratio [[3]].

Key Financial Highlights

• Revenue increased by 1.8% to S\$319.4 million.
• Net profit after tax decreased by 6.8% to S\$31.7 million.
• Gross profit margin increased slightly to 28.4%.
• Proposed final dividend of 1.0 Singapore cent per share, totaling 2.0 cents for FY2024.

Strengths

• Strong market presence with a wide network of outlets.
• Ability to control costs through central kitchen operations.
• Diversified product offerings catering to various customer preferences.

Risks

• Decline in net profit due to increased operational costs.
• Exposure to economic uncertainties and rising competition.
• Increased administrative expenses impacting profitability.

Special Activities and Strategies

Kimly is expanding its production capabilities by relocating its Food Seasoning Manufacturing arm to a larger facility, and increasing the production of semi-cooked products. They are also focusing on expanding their Halal product offerings to meet rising demand [[4]].

Investment Recommendations

If Currently Holding the Stock

Investors holding Kimly stock may consider maintaining their position due to the company’s strong market presence and strategic initiatives to enhance productivity and expand into new markets. However, they should closely monitor operational costs and any further declines in net profit.

If Not Currently Holding the Stock

Potential investors should adopt a cautious approach. While the company has growth potential through market expansion and operational improvements, the current decline in net profit and economic uncertainties pose risks that need careful consideration.

Disclaimer

This analysis is based on the financial report provided and does not account for external market conditions or future developments. It is advisable for investors to conduct their own research or consult with a financial advisor before making investment decisions.

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