Harry's Holdings

[piggo]

Agreed that it's still too early to tell.

Though I'm not too impressed with the crowds at their bars and restaurants. Unlike most bars in CQ, Harry's lacks some kind of identity. It's just the average bar, with the standard drinks... i.e no "specialisation" in tequila shots, magaritas, micro brewery etc etc. The food served also loses out to competitors like Brewerkz... Also judging from the array of bars in SG, it's not a good business area to be in; too competitive.

[dydx]

Do take note that today (17Mar11), the founder/largest shareholder/CEO Mohan Mulani and his wife, Rita Mulani, have each bought from the open-market and added 250 lots at $0.14/share.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument [Mohan Mulani's purchase]
http://info.sgx.com/webcorannc.nsf/Annou...endocument [Rita Mulani's purchase]

Including these 2 purchases, the husband-and-wife team now owns a total of 41.32m shares, or a combined 43.5% stake, in Harry's.

[dydx]

Do take note that on 24Mar11, the husband-wife team added another 200 lots each.....
http://info.sgx.com/webcorannc.nsf/Annou...endocument [Mohan Mulani's purchase]
http://info.sgx.com/webcorannc.nsf/Annou...endocument [Rita Mulani's purchase]

[dydx]

The just released FY10 (ended 31Dec10) AR makes interesting reading.....
http://info.sgx.com/listprosp.nsf/07aed3...60021cf25/$FILE/Harry's%20Holdings%20Limited%20%20AR2010%20(SAR1102008).pdf

A quick look at the latest Statistics Of Shareholdings (p82/83) shows quite a few people of at least some reputation or background among the "20 Largest Shareholders", including even a small stake (1.0m shares) held by the Singapore Hong Leong Group (through their investment company Starich Investments P/L).

To find out the background of the individuals, I usually just google their names, and sometimes what comes out can be quite revealing!

[Drizzt]

this stock likely will go the trend of food junction. they will eventually find margins a problem

[karlmarx]

it appears that margin is already a problem. it fell from about 5% (FY09) to 2% (FY10), and this includes removing ipo expenses for FY10 calculations. if nothing changes and inflation persists, next FY it might possibly be in the red.

a good f&b business shouldn't be earning such low margins. they must have alot of wastages, operate in locations with too expensive rentals, and poor cost controls. to top it off, the ceo actually have the cheek to pay himself 500k-750k for what a lousy job done, with more than 90% of his compensation in salary. unbelievable.

i reckon they should have a new cfo to streamline costs. and new IDs that recommend more sensible compensation.

[dydx]

It is not easy to grow a business - in this case, the largest bar chain in Singapore; a chain of theme restaurants; and a boutique hotel (with 1 or more to come) - and a successful consumer brand. It will take time and effort, and a certain special management talent.

The established portion of Harry's businesses - essentially the Bars (especially those older bars), and Franchising & Playschool - actually deliver steady operating profit and positive FCF. There is clear evidence of this in the Segment Information (in p69/70 of the FY10 AR).

Harry's much lower PBT in FY10 was dragged down by (1) $855k of IPO expenses, (2) approx. $974k of start-up expenses/losses of the new Hospitality Div. (essentially "The Club" at Ann Siang Hill), and (3) unknown start-up expenses/losses of 7 new Harry's bars and 2(?) Mirchi Taste of India restaurants opened during the FY.

Since commencing operations in May10, The Club has delivered a revenue of $2.35m in its 8 months of operation in FY10, including $2.072m and a small positive FCF in H2. Based on the positive trend, The Club could deliver as much as $5.0m in revenue and a nice profit in FY11.

A well-established and run F&B business should be able to deliver a healthy PBT Margin of approx. 10% and a NP Margin of approx. 8% on revenue over time. With some luck, Harry's revenue in FY11 should come close to $50m. Let's see whether Harry's is able to also deliver a PBT of close to $5m and a NP of close to $4m, after adjusting for start-up expenses/losses of any new outlets opened in the FY and performance bonus for executives.

It is useful to review Harry's latest Corporate Presentation (dated Jan2011).....
http://www.harrys.com.sg/Downloads/Harry...011-v2.pdf

[karlmarx]

i wholeheartedly agree that growing a business is difficult. and harry's is no doubt a strong consumer brand. my beef with harry's it isn't focusing on improving its bar's bottomline.

having such a good brand and seeing that its bar generates the bulk of revenues, i do not understand why harry's does not focus on being more cost-efficient in its operations. harry's bar is an unpolished gem. their foray into hospitality shows their lack of resolve to improve the bar business' bottomline. spamming more bars across the island without due diligence will not increase profits.

there are many 'branded' f&b establishments in singapore. but how many are profitably well-run? tunglok, sakae, delifrance, and burgerking are a few examples of poorly-run 'branded' f&b. these are quality businesses with some form of moat, but are ruined by financial imprudence / poor capital allocation.

[dydx]

CEO Mohan Mulani has recently written a book with the title "The Story of Harry's" and Marshall Cavendish (a unit of Times Publishing/F&N Group) has helped published it....
http://www.marshallcavendish.com/marshal...apore.aspx

Apparently there is promotion now at Harry's bars that purchaser of the book will get a bottle of Harry's Premium Lager beer. Sounds good?

An on-line article on an interview with the man.....
http://food.insing.com/feature/mohan-mul...d-935b0300
and an old CNBC interview from Youtube....
http://www.youtube.com/watch?v=BfLwd2TfDZk

[dydx]

Checked my bank account this morning and noted a nice credit From Harry's $0.0022/share Final dividend for FY11. Feeling good!

"Harry's" is such common name in the West. In New York alone, there are 2 well-known Harry's with a long-enough history.....
http://www.harrysnyc.com/about.cfm
http://www.harrysmanhattan.com/story.html

I wonder what's the value of the brandname "Harry's" if the business can last for a long time more to come?