KIMLY LIMITED (SGX:1D0)
Kimly - FY21 Excellent Results Supported By JSS Savings & Rental Rebates
- Kimly’s FY21 net profit grew 55.8% y-o-y to S$39.2m, forming 142.8% of our full-year forecasts. Outperformance was largely due to S$15.8m of JSS savings and rental rebates which boosted earnings. All of Kimly’s business segments recorded strong revenue growth as new outlets and stalls opened in FY21.
- Kimly maintained its high net cash balance of S$70.6m and its S$54m acquisition of Tenderfresh was completed in 1 Oct 21.
Kimly's strong outperformance largely due to JSS savings.
- For FY21, Kimly (SGX:1D0) reported strong y-o-y growth for its revenue (+13.2%) and net profit (+55.8%), exceeding our full-year estimates by 4.7% and 42.8% respectively. The substantial growth in net profit was largely due to a full year contribution of Job Support Scheme (JSS) savings and rental rebates. Excluding the S$15.8m JSS savings and rental rebates obtained, FY21 net profit would have dropped by 5.9% y-o-y.
- Kimly declared a final dividend of S$0.0084 cents and a special dividend of S$0.006, equating to a FY21 full-year dividend of S$0.02 (FY20: S$0.0112) and dividend payout ratio of 62.5% (FY20: 52.6%).
- Sturdy results from Kimly’s business segments. FY21 revenue from the outlet management segment grew (+S$9.2m, +8.8% y-o-y) due to contributions from three newly opened coffee shops and improved footfall in FY21. Revenue from the food retail segment increased (+S$15.0m, +14.4% y-o-y) as higher contributions from existing stalls, larger adoption of food delivery and six newly opened food stalls in FY21 contributed to the solid growth in revenue. The new outlet investment segment recorded S$6.8m revenue in FY21, more than doubling FY20’s S$3.1m revenue. Total number of food outlets (+2 y-o-y) and food retail stalls (+2 y-o-y) increased to 85 and 148 respectively. We expect Kimly to increase its outlets and stalls by 3-4 each per year.
Robust balance sheet.
- Due to its strong cash generative Kimly seeks to expand its coffee shop portfolio. This has resulted in the S$54m acquisition of a 75% stake in Tenderfresh Group (Tenderfresh) in 2HFY21.
Completion of Tenderfresh acquisition.
- Kimly announced on 1 Oct 21 that the acquisition of a 75% stake in estimates, we reckon that the Tenderfresh acquisition would boost Kimly’s FY22 net profit by S$4-5m.
Kimly - Valuation & Recommendation
- We lift our FY22-23 forecasts and add in FY24 forecasts. Factoring in contributions from the Tenderfresh acquisition, along with stable revenue hit on earnings, we reckon that potential upside is capped at current Kimly's share price levels, barring any new acquisitions.
- We opine that key re-rating catalysts would be future major earnings accretive acquisitions.
- See
- Catalysts:
- Better-than-expected contributions from coffee shops.
- Earnings accretive M&As.
John Cheong
UOB Kay Hian Research
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https://research.uobkayhian.com/
2021-12-15
SGX Stock
Analyst Report
0.41
UP
0.360
