'Modern kopi-boy' Kimly sets stage for future coffee shops

Singapore

SINGAPORE'S coffee shop scene could take a modern twist, following the launch of an initial public offering by Kimly which is seeking over S$40 million to grow its business.

The group launched its IPO for listing on the Singapore Exchange's Catalist board on Wednesday. It is the first traditional coffee shop operator in Singapore to do so.

Kimly is offering 173.8 million new shares comprising 3.8 million offer shares and 170 million placement shares priced at S$0.25 per share.

This will raise a total of S$40.4 million in net proceeds, of which S$30 million will be used for general business expansion, acquisition and joint ventures, Kimly said.

The rest of the net proceeds will be used for refurbishment of its existing food outlets, upgrading its Central Kitchen in Woodlands, and productivity and IT.

The pricing reflects a price-to-earnings ratio of 12.02 times.

Kimly's market value will stand at S$288.7 million. The placement will close at 12pm on March 16 and trading is expected to commence at 9am on March 20.

Vincent Chia, executive director of Kimly, said in a briefing on Wednesday: "Consumer trends are changing. It's a challenge to keep up. We're traditional coffee boys but we're adopting technology to help us do things better."

Calling Kimly a "forward-looking kopi boy", Mr Chia said that the company sees potential in expanding their other food divisions like seafood "zi char" which is not available online now.

Plans to modernise the traditional coffee shop business are already in place. Since November, Kimly has partnered with Deliveroo to make its dim sum products available to customers through online ordering and delivery. There is also a mobile app in place to track inventory at its dim sum stalls. Real-time information is sent to the operation managers to monitor the performance of each stall.

It is also doing e-payments in institutions such as NUS. Kimly intends to work with more service providers and appeal to the younger generation with the prevalence of e-wallets. In terms of technology and machinery adoption, it is currently building an extension of a four-storey annex factory to expand capacity of the headquarters and Central Kitchen.

Formed in 1990, Kimly manages 64 food outlets and 121 food stalls across Singapore. The food stalls comprise 36 mixed vegetable rice stalls, 10 rice garden stalls, two Teochew porridge stalls, 43 dim sum stalls, 29 seafood "zi char" stalls and one live seafood flagship restaurant. It also has five food courts under the FoodClique brand.

Kimly's largest food stall operator is a fishball noodle business with 30 stalls. In total, the coffee shop operator has an occupancy rate of 98 per cent.

With a market share of 5.8 per cent as at Sept 30, 2015, it said that it is the largest market player in the industry. Kimly sees a "considerable potential to expand and acquire a larger market share in the coffee shop and food court industry". Its competitors in the coffee shop business are Chang Cheng Group, Broadway Group, Kopitiam Group and S11 F&B Holdings.

Mr Chia believes that the relationship Kimly has with the stall owners is what sets them them apart. He said: "Relationship is easier to build when you don't always talk about money."

Kimly's net profit for the financial year ended Sept 30, 2016 was S$12.17 million, up 5.3 per cent from S$11.56 million the year before. Total revenue increased by 10.4 per cent to S$172.2 million due to the operations from its new coffee shops, food courts and drink stalls.