Neo Group

[cyclone]

@ NEO GROUP's AGM: 5 takeaways (aside from the sumptuous lunch!)

Written by Leong Chan Teik
Published: 23 August 2018

Key takeaways:
1. Acquisitions for broad-based "empire"
2. Bolstering balance sheet
3. Turning U-Market around
4. Stock price
5. Grab-and-go hot snacks

More details in https://nextinsight.net/story-archive-ma...roup-s-agm

[holymage]

Indeed. Mr Neo has been acting on his words on building his empire.

1. Acquisitions for broad-based "empire": Executive chairman Neo Kah Kiat said the company had grown from 3 catering brands in 2012 during its IPO to 8 now, and would continue to make acquisitions. 

"Every year, I will try to acquire one or two catering companies. The targets would be 'smaller' ones for now and we take a selective and cautious approach towards the bigger M&As."

[cyclone]

Neo Group acquires earnings accretive How’s Catering for S$4.4 million

Neo Group Limited announced today the acquisition of Ye Liang How Catering Service Pte Ltd (“How’s Catering”). This earnings accretive acquisition with an aggregate consideration of approximately S$4.4 million will see the Group taking a 51.0% stake in How’s Catering, while existing owners retain the remaining 49.0%.

With roots that trace back to 1991, How’s Catering has risen to become one of the more renowned food caterers in Singapore that focuses on serving corporate clientele. Apart from corporate customers, How's Catering’s other offerings include catering for thematic and festive events, weddings as well as healthier-choice gourmet spreads.

The acquisition will be funded by a combination of cash amounting approximately S$3.6 million and the issuance of 877,193 new shares at S$0.57 per share. Additionally, an earn out consideration of approximately S$0.3 million will be payable, provided How’s Catering’s aggregate consolidated net profit before tax for the financial period from 1 April 2018 to 31 March 2019 (“FP2019”), financial year ended 31 March 2020 (“NFY2020”) and financial year ended 31 March 2021 (“NFY2021”) is more than S$4.0 million.

More details in :
1. http://infopub.sgx.com/FileOpen/NGL-Hows...eID=524583
2. http://infopub.sgx.com/FileOpen/NGL-Pres...eID=524584

[kelvesy]

Looks like they are trying to consolidate the industry, does it mean that their organic biz is slowing down?

[weijian]

It is actually worrying if the singular focus is on revenue growth. But expanding vertically and then horizontally nearby your circle of competence/market, seems like a good move to me (contrast that with Sakae Group)

A whole new ball game for Neo Group

Mr Neo also floated the idea of a listing for the 80.7 per cent-owned Thong Siek unit, which makes DoDo-branded fish paste products. It could go public depending on how it does in the next few years, he said, but declined to give more details.

Neo Group had bought a 55 per cent stake for S$7.35 million in 2015 and raised its interest last month.

And there just seems to be no stopping the shopping. The group announced in April that it would take a 51 per cent stake in Lavish Dine Catering, followed by a similar buy-in with How's Catering in September.

The spate of purchases came even though Neo Group posted losses again in its latest half year. Its net loss shrank to S$236,000 for the six months to Sept 30, down from S$1.2 million in same period the year prior.

Mr Neo attributes the fall into the red to his zeal for new purchases. "If I did not have all these new businesses, I would be profitable. We have one arm that is the most profitable," he said, referring to the catering core.

"So this is the muscle that I have. Then why do I say that I need to continue to acquire? It's because I have one arm that is very profitable and can continue to generate profits. That allows me to continue to acquire. And when we bought Thong Siek, there were significant losses. Now, we have made it profitable. We might also think of spinning it off for a listing."

https://www.businesstimes.com.sg/compani...-neo-group

[opmi]

food business strong operating cashflow....

[mslee888]

Mr Neo should pare down company borrowings and debts and stop acquisitions for a while. Let the biz stabilise and grow steadily.

[money]

Mr Neo seems intent to send the message that he is good at buying loss-making companies and turning them around and then listing them thereafter. But it seems to me that he mentions nothing about buying loss-making companies and having difficulty turning them around.

I am not sure if he is astute at operations but i am very sure he is good with numbers and playing with financials. Sell optimisim, keep the share price high and use the overvalued shares to buy other companies. If this is a way to grow, it is not that bad an idea, but if he can purchase profit-making companies in the first place, i thought it would be a better idea

[weijian]

Mr Neo seems intent to send the message that he is good at buying loss-making companies and turning them around and then listing them thereafter. But it seems to me that he mentions nothing about buying loss-making companies and having difficulty turning them around.

I am not sure if he is astute at operations but i am very sure he is good with numbers and playing with financials. Sell optimisim, keep the share price high and use the overvalued shares to buy other companies. If this is a way to grow, it is not that bad an idea, but if he can purchase profit-making companies in the first place, i thought it would be a better idea

Buying companies whole like Mr Neo did, is probably very similar to an OPMI buying equities - all part of this thing called asset allocation. In asset allocation, the key is to maximize the winners and minimize the losers, rather than only selecting winners/totally avoid losers. I believe all of us prefer to "advertise" our winners, it feels better and is self reinforcing to our own ego. That said, I do tend to agree that there is much more to learn if someone is willing to share the "lessons from their losers".

[new-comer1]

Food caterer Neo Group to diversify into property business with Boldtek JV

https://www.businesstimes.com.sg/compani...boldtek-jv

NEO Group is looking to make its foray into property development, investment and management.

This will mean expanding its existing core business of providing end-to-end food and catering solutions, the Catalist-listed firm announced in a regulatory filing on Friday.

Neo Group has four main business segments - food catering, food manufacturing, food retail, and supplies and trading.

It plans to form a Singapore-incorporated joint-venture (JV) company with construction firm Boldtek Holdings to carry out the new property business.

Catalist-listed Boldtek and Neo Group on Friday inked a JV agreement, in connection with the proposed diversification.

Operating in Singapore and Malaysia, Boldtek provides general building services, runs a precast manufacturing plant, and has a property development and investment business. It also has interests in soil investigation and treatment.

Neo Group noted that the property industry will provide diversified business opportunities, broaden the group's stream of income and revenue, and enhance shareholder value.

The new business will likely bring benefits, including additional and recurrent revenue streams, such as from rental fees and management fees, the company added.

Besides, there are potential synergies, as the property-related assets under the new division may be leased to its existing food businesses so as to reduce possible rental disruption with third-party landlords.

Neo Group will also be able to cater to a wider range of customers, including venue partners and tenants, in its property-related assets.

"The group can leverage its current networks, experience and knowledge in the operation of food and beverage businesses, such as cafeterias, restaurants, bistros and bars, providing quick service and event management solutions," Neo Group said.

Another benefit of the proposed business is a more diversified business and income base, which will reduce reliance on the existing business, it added.

Neo Group will venture into the property business "prudently". It does not plan to restrict the property business to any geographical market.

In a separate filing on Friday, Boldtek's board of directors said the proposed JV will help increase Boldtek's involvement in the property development business and expand beyond its core business of general building and construction.

Boldtek did not have any property development projects in the pipeline as at Friday, and the segment accounted for just 1.8 per cent of group revenue in FY2019.

Moreover, the JV will allow Boldtek to leverage Neo Group's business networks and resources while maximising existing revenue streams, the board added.

Boldtek and Neo Group were independent and unrelated parties with no prior business, commercial or trade dealings before the JV agreement was signed.

Neo Group will convene an extraordinary general meeting to seek shareholders' approval for the proposed diversification, which is expected to change the company's risk profile.

The JV agreement will terminate if shareholders do not approve the diversification.

Shares of Neo Group rose 3.5 Singapore cents or 6.3 per cent to trade at 59.5 cents as at 2.36pm on Friday. Boldtek shares last traded at 9.7 cents on Aug 21.