YKGI Limited 1H 2025 Financial Results: Resilience Amid Industry Headwinds

YKGI Limited, a listed F&B and food court operator, released its unaudited condensed interim results for the six months ended 30 June 2025. The Group operates food courts, food outlets, and franchises primarily in Singapore, with recent expansion into Macau. This article analyzes key performance metrics, trends, segmental results, dividends, and management commentary to provide investors with actionable insights.

Key Financial Metrics & Performance Summary

*Note: The report covers semi-annual periods (1H/2H), so quarter-on-quarter comparison is not available.

Segmental Performance

• F&B Operations: Revenue grew marginally (+S\$0.2m), but profit before tax fell sharply from S\$2.1m to S\$0.9m due to rising costs and expenses, and losses from newly opened outlets.
• Food Court Business: Revenue increased by S\$0.4m, with profit before tax rising from S\$0.4m to S\$1.3m, driven by higher footfall and reduced depreciation expenses.
• Franchise Business: Revenue was up S\$0.9m, but profit before tax dropped from S\$1.7m to S\$1.5m due to higher staff and depreciation costs.

Cash Flow and Balance Sheet Position

• Operating cash flow: S\$6.0m generated in 1H25, down from S\$7.9m in 1H24, reflecting lower profits and higher working capital outflows.
• Investing cash flow: S\$0.5m outflow, mainly for new property, plant, and equipment.
• Financing cash flow: S\$6.2m outflow, including S\$1.5m dividend, S\$3.8m lease repayments, and S\$0.8m interest paid.
• Cash and bank balances: S\$20.6m as at 30 June 2025 (down S\$0.6m from year-end 2024).

Dividends

• Interim dividend: 0.36 Singapore cents per share, unchanged from 1H24.
• Dividend is tax-exempt and payable on 29 August 2025.

Management & Chairman’s Statement

“The food and beverage (F&B) industry in Singapore continues to face a challenging business environment. Rising costs—including rent, raw materials, utilities, and manpower—continue to put pressure on profit margins. The industry is also affected by a shortage of workers, made worse by local labour constraints and tighter foreign worker policies. In addition, the Progressive Wage Model has pushed up labour costs, as businesses need to offer higher wages to attract and retain staff in a competitive market.

At the same time, ongoing global uncertainties such as trade tensions and tariffs are expected to drive inflation and create a more volatile economic environment. These factors may weaken consumer confidence and reduce overall spending.

To address these challenges, the Group is focused on improving profitability and strengthening its market position. Key steps include closing unprofitable outlets and opening new ones in better locations, reducing operating costs, and improving gross margins. The Group is also working on expanding its product range, building new brands, and forming strategic partnerships to reach more customers.

In May 2025, the Group opened its second CHICHA San Chen outlet in Macau, marking continued progress in its overseas expansion.

Looking ahead, the Group will continue to fine-tune its operations, invest in productivity improvements, and adjust its strategies in response to market changes. These efforts aim to support long-term growth and maintain the Group’s competitiveness.”

Tone: Cautiously optimistic, acknowledging industry headwinds but emphasizing ongoing strategic initiatives and adaptability.

Directors’ Remuneration

• Total compensation to directors and key management for 1H25: S\$1.04m (vs S\$1.01m in 1H24).
• Executive directors: S\$460k; Other key management: S\$575k.

IPO Fund Utilisation

• IPO proceeds raised: S\$12.0m
• Utilised: S\$4.08m (S\$2.05m for general working capital, S\$2.05m for business expansion)
• Balance: S\$7.95m (earmarked for further expansion and strategic initiatives)

Notable Events & Corporate Actions

• Continued overseas expansion with a new Macau outlet.
• Acquisition of an additional 5% stake in Yew Kee Group International (Macau) Limited in March 2025, increasing Group’s interest from 90% to 95%.
• No share buybacks, major divestments, or unusual related-party transactions reported for the period.

Conclusion and Investment Recommendations

Overall Assessment: YKGI Limited demonstrated resilience with slight revenue growth, stable dividend payout, and effective cost controls in certain segments. However, profitability declined due to industry-wide headwinds—particularly higher manpower costs, depreciation, and operating expenses from new outlet expansion. Management is proactively addressing these challenges through operational fine-tuning, targeted expansion, and cost management.

If you are currently holding the stock: Consider holding your position if you believe in management’s ability to navigate industry challenges and execute on expansion plans. The Group maintains a healthy balance sheet, consistent dividend, and clear strategic focus. However, monitor for further margin compression or negative trends in new outlet performance.

If you are not currently holding the stock: Consider adopting a wait-and-see approach. While the Group is stable and maintains growth initiatives, margin pressures and earnings volatility amid sector headwinds may continue in the near term. Entry may be more attractive upon signs of margin recovery, stabilization of new outlets, or improved macro conditions.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. Please conduct your own due diligence or consult with a qualified financial advisor before making investment decisions.

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