Yew Kee Duck Rice, Chicha San Chen franchise operator to raise S$16.6m in Catalist IPO
Uma Devi
YKGI on Thursday (Jan 26) launched its initial public offering (IPO) for a listing on the Catalist board of the Singapore Exchange (SGX).
The group, which is best known as the operator of Yew Kee Duck Rice and bubble tea brand Chicha San Chen in Singapore, is looking to raise gross proceeds of about S$16.6 million.
It will put some 82.8 million shares up for sale at S$0.20 apiece in a placement tranche. Of these, about 53.8 million shares are new shares, while the remaining 29 million shares are vendor shares sold by the current shareholder.
These placement shares will constitute about 19.5 per cent of YKGI’s enlarged issued share capital post-IPO. There will be no public offer.
YKGI also raised about S$3.3 million in proceeds from issuance of 16.3 million shares to its cornerstone investors. These investors included Teo Kee Bock, founder of three-in-one beverage maker Super Group, and Huan Yong Group – the investment vehicle of Super Group co-founder Ronald Te and his family.
The IPO is expected to rake in net proceeds of S$17.5 million from the sale of placement and cornerstone shares, after deducting the placement commission and listing expenses.
Based on the issue price, YKGI will have a market capitalisation of S$85 million at listing.
YKGI has a total of eight food and beverage (F&B) related brands under its portfolio. Apart from Yew Kee Duck Rice and Chicha San Chen brands – for which YKGI is the exclusive franchisee – the group also operates others including the My Kampung Chicken Rice, PastaGo, Victoria Bakery and XO Minced Meat Noodles brands.
It expanded into food court management in 2017, and currently operates food courts under the My Kampung and Fine Food brands.
In an interview with The Business Times, YKGI’s chief executive Seah Qin Quan said that the funds from the IPO will primarily be used for expansion across the brands.
For Yew Kee Duck Rice, which currently only has a presence in Singapore, Seah said that the funds will be used to help propel the brand into new markets across South-east Asia.
YKGI will also be utilising some of the IPO proceeds to push Chicha San Chen into new markets. The bubble tea brand already operates in a number of markets apart from Singapore. These include Malaysia, Cambodia, the Philippines, China and the United States. In addition, Seah said YKGI is looking to build its PastaGo and Victoria Bakery brands.
YKGI, which was incorporated in 2022, is owned by a company controlled by executive chairman Seah Boon Lock, the founder of Yew Kee Duck Rice (previously known as Yu Kee Duck Rice), which has been around since the 1980s. The duck rice brand can, however, be traced back to the 1950s when Seah Boon Lock’s father Seah Teck Yew operated a pushcart selling braised duck in Nee Soon.
Seah Boon Lock is the father of Seah Qin Quan and YKGI’s chief marketing officer Seah Kun Miao.
As third-generation leaders of the company, Seah Qin Quan and Seah Kun Miao said their father plays an advisory role in business operations. The brother-sister duo said it was their father who initially spotted an opportunity for YKGI in the up-and-coming bubble tea space – and advised both of them to explore it.
“I think what makes him different (from other patriarchal leaders) is the fact that he will never reject things that we share or propose. He is always open to new ideas… and he will ask (us) to go and explore them,” said Seah Qin Quan.
He added that the group was mulling “the idea of doing a public tranche” for the IPO. However, this was dropped after they received “quite a good response” from YKGI’s cornerstone investors.
Seah Qin Quan said that YKGI had been exploring a listing for the past two years, but was forced to put these plans on hold due to the Covid-19 pandemic.
According to documents lodged, YKGI recorded an unaudited net profit of about S$2.4 million for the first half of 2022, versus S$3.7 million in the corresponding period for 2021. The group’s audited net profit for FY2021 came in at S$8.9 million. Revenue was S$26.8 million in H1 2022, down slightly from revenue of S$27.6 million in the year-ago period.
Seah Qin Quan said that YKGI is able to sidestep some price hikes because it buys certain raw materials in bulk or through contract purchasing.
Looking ahead, YKGI said that it will also strengthen its supply chain capabilities by expanding and upgrading its central kitchen and warehouse to ramp up capacity and improve operational and cost efficiencies. The group will also expand its franchising and sub-franchising operations, as well as accelerate growth through strategic acquisitions and joint venture partnerships.
To date, YKGI operates one central kitchen, 43 food outlets and four food courts.
The group was granted a franchise and licence to operate the Chicha San Chen brand in Singapore for 10 years, starting from January 2019. It currently runs 30 outlets of the bubble tea brand in Singapore, which contributed 39.8 per cent to the group’s total revenue in H1 2022.
YKGI’s directors said that they intend to recommend dividends of at least 50 per cent of the group’s earnings for FY2023 and FY2024.
The placement will close at noon on Feb 1, with listing and trading of YKGI’s shares expected to commence at market open on Feb 6.
