Neo Group

Agree. We just had a farewell 3 weeks back and the curry chicken and fried rice was good

When I first came across Neo group in March last year, it was 30+cents. At that time, I find it expensive. A few month back when it doubled, I still find it expensive. Less than a year from my first encounter with this stock, it is going at three times the price then. And now I still find it expensive.

Great solid story or being fried up?

The company FY2014 result is announced, with financial end-year on Jan 2014. I am impressed by the result. A CAGR of 23% for revenue, and 30% for net profit, during the last 5 years.

Latest price is 90.5 cents, EPS of 4.44 cents, BVPS of 14.2 cents, and dividend of 2.67 cents. That means PE of 20, PB of 6, and dividend yield of close to 3%

Expensive? It might be a good deal, if the growth is sustainable.

(not vested)

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NEO GROUP ACHIEVES RECORD SALES AND NET PROFIT IN FY2014
- Revenue hits new record at S$52.4 million mainly from robust growth in Food Catering Business
- Achieves record net profit, which more than doubled to S$6.4 million, mainly with stronger operating profit contribution from Food Catering
- Proposes final cash dividend of 1.51 SGD cents per share, bringing total dividends for FY2014 to a record-high of 2.67 SGD cents per share, 78% higher compared to prior year (FY2013 : 1.50 SGD cents)
- Centralised kitchen to add three to four times capacity when completed in 2Q 2014
- Remains positive and confident about its industry outlook

News Brief: http://infopub.sgx.com/FileOpen/NGL-News...eID=288694
Presentation Slide: http://infopub.sgx.com/FileOpen/NGL-Resu...eID=288726

(13-02-2014, 10:07 AM)GPD Wrote: When I first came across Neo group in March last year, it was 30+cents. At that time, I find it expensive. A few month back when it doubled, I still find it expensive. Less than a year from my first encounter with this stock, it is going at three times the price then. And now I still find it expensive.

Great solid story or being fried up?

I have this issue. Basically for me is because blind sided by PE . When I think is too high but forgot about the Growth in EPS it provides. When is anticipated and achieved, PE can remains high for long period of time. Using a back mirror, is cheap actually.

Are the food that good?

Sure got more and more bigger players come in.

And undercut them. If each of them focus on 1 segment and compete, Neo garden will have tough time. Problem is other competitors not so smart...

Neo group and Select group are one of the largest in their business.

In fact, I will consider them as direct competitors as each group have catering brands which caters to each segment of the market (Halal/Non Halal), (high end-Low end). These 2 are the ones you can turn to if the smaller caterers are closed. Previously, I had to plan for a catering session on CNY eve. Select and Neo group had vacancies, while the smaller preferred halal caterers simply said they were closed on CNY eve! *Smaller caterers do not carry numerous brands, they simply operate in their niche areas of expertise.

As for Neo Group's Umi sushi, the business model is mainly to home deliver sushi at affordable prices or at convinent locations, which is why its outlets operate from SMRT stations shop outlets. The pricing of Umi is relatively lower than Sakae's. However, quality wise sakae is better. For sakae, you need to order a min of $40 for home delivery. This is my personal view.

EPS wise Neo is priced at 20.5x PE. In my opinion for a cut throat industry with many competitions and rarely any moat. A company will be fairly valued at 10x PE. Thus market is pricing in 25% yoy growth for 2-3 years, which I believe is grossly over valuing Neo Group's growth prospect.
<not vested>

Very likely that the shares are overvalued. The fact that the share price grew does not mean a single thing for the business.

- Too much growth embedded in Price/tangible book for the kind of normalized return on its tangible equity.
- Very hard to forecast competition like what CY09 said. No moat, heavy competition, you don't know how sustainable the profits are unless you have other significant insights.
- Even if earnings are stable, growth in earnings is very unlikely to sustain this pace. Nothing grows up to the sky, especially if you are in the prepared foods business.

My casual observations only.

Neo Group continue with its expansion. The company shares are currently priced at 98 cents, or about PE 22 and PB 7. The company ROA/ROE was 15%/31% respectively

A stock worth to put into watchlist?

(not vested)

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NEO GROUP OPENS 24th UMISUSHI OUTLET IN CHANGI GENERAL HOSPITAL AND INTRODUCES NEW JAPANESE CUISINE CONCEPTS
- 24th outlet to feature new menu items and healthy breakfast sets such as salmon porridge and wasabi lobster sandwiches;
- New concept issho izakaya, a Japanese drinking and dining establishment for PMEBs, friends and families, to open at Sports Hub in June 2014;
- New concept NANAMI UDON, offering favourite Japanese Tempura and Udon meals at great value and convenience, to open at One Raffles Place in July 2014
...
http://infopub.sgx.com/FileOpen/NEOGPNEW...eID=295962

Food / restaurants while appear defensive (since everyone needs to eat), it is generally tough businesses given the constant rising rental and labour costs. In addition, the constantly changing consumer taste will warrant regular updates in food concepts and result in capex that needs to investments for store changeover (I think typically less than 3 years).

Unfortunately, most free cashflows from these operators are not impressive, breadtalk included I think.

Not vested
GG

(08-05-2014, 03:40 PM)CityFarmer Wrote: Neo Group continue with its expansion. The company shares are currently priced at 98 cents, or about PE 22 and PB 7. The company ROA/ROE was 15%/31% respectively

A stock worth to put into watchlist?

(not vested)

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NEO GROUP OPENS 24th UMISUSHI OUTLET IN CHANGI GENERAL HOSPITAL AND INTRODUCES NEW JAPANESE CUISINE CONCEPTS
- 24th outlet to feature new menu items and healthy breakfast sets such as salmon porridge and wasabi lobster sandwiches;
- New concept issho izakaya, a Japanese drinking and dining establishment for PMEBs, friends and families, to open at Sports Hub in June 2014;
- New concept NANAMI UDON, offering favourite Japanese Tempura and Udon meals at great value and convenience, to open at One Raffles Place in July 2014
...
http://infopub.sgx.com/FileOpen/NEOGPNEW...eID=295962