LH Group Announces Strategic Joint Venture with FairPrice Group in Singapore

Key Points of the Announcement

• Joint Venture Formation: LH Group Limited has entered into a joint venture agreement with FairPrice Group Food Services Pte. Ltd., Singapore’s largest supermarket and FMCG retailer. The new entity, Gohan Concepts Pte. Ltd. (“JV Company”), will be 49% owned by LH Group’s subsidiary and 51% by FairPrice Group.
• Business Focus: The JV Company will focus on developing and operating premium, selected Japanese food and beverage concepts in the Singapore market.
• Financial Impact: The JV Company will be treated as an associated company, not a subsidiary, meaning its results will not be consolidated into LH Group’s financial statements.
• Strategic Expansion: The collaboration marks LH Group’s official entry into the Singapore market and sets the stage for further expansion into other Southeast Asian countries.
• First Brand to Launch: The JV Company will introduce the renowned yakitori chain “Torikizoku” (owned by Eternal Hospitality Group Co., Ltd., Japan) to Singapore, with plans to bring in more premium Japanese dining brands tailored to local preferences.
• Potential for Broader Regional Growth: LH Group aims to use this partnership as a foundation to extend its successful operational model throughout Southeast Asia.

Details and Potential Impact for Shareholders

This voluntary announcement signals a significant step in LH Group’s international expansion strategy. By partnering with FairPrice Group, which boasts over 230 outlets under multiple supermarket and convenience store brands in Singapore, LH Group leverages both its own expertise in Japanese brand franchising and FairPrice’s extensive retail network and operational strength.

The joint venture is expected to drive growth by tapping into Singapore’s vibrant food and beverage sector, introducing established Japanese dining experiences, and subsequently expanding to other Southeast Asian markets. This could open up new revenue streams and diversify LH Group’s business portfolio beyond its core Hong Kong operations.

Shareholders should note that, while the JV Company will not be a subsidiary and its results will not be consolidated into LH Group’s accounts, the collaboration lays a strategic foundation for long-term value creation. The move enhances LH Group’s capabilities in Southeast Asia and positions the company for further international expansion.

The Directors of LH Group regard this as a critical milestone that could enhance the group’s growth prospects, competitiveness, and brand value in the region. Any successful expansion and brand launches, especially with a strong local partner like FairPrice, have the potential to positively impact the company’s future earnings and share value.

It is also important for investors to note that, according to the Listing Rules, all applicable percentage ratios for the transaction are below 5%, so the joint venture does not constitute a notifiable transaction under Chapter 14 of the Listing Rules.

Board and Governance

As of the announcement, LH Group’s board comprises Mr. Wong Kit Lung Simon (Chairman), Ms. Ko Sau Chee Grace (Executive Director), and three independent non-executive directors: Mr. Sin Yat Kin, Mr. Hung Wai Man, and Mr. Mak Kam Chiu.

Conclusion

This collaboration is a noteworthy development for LH Group, marking its expansion into Southeast Asia’s lucrative food and beverage market through a high-profile partnership and with ambitious plans for further regional growth. Investors should closely monitor the progress of the JV Company’s operations in Singapore and the subsequent regional expansion, as successful execution could drive long-term value and potentially affect share price performance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence or consult with a professional advisor before making any investment decisions related to LH Group Limited or its securities.

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