ABR Holdings

[yaosheng]

Just wondering, does anyone notice how well is Cocoa Trees doing against Candy Empire? (i suppose its closest competitor) Whenever I go past the Cocoa Tree at Raffles City, it seems a little empty.

ABR does derive a significant chunk of revenue from chocolate distribution. Do chip in with observations on the local scene!

[kazukirai]

Just wondering, does anyone notice how well is Cocoa Trees doing against Candy Empire? (i suppose its closest competitor) Whenever I go past the Cocoa Tree at Raffles City, it seems a little empty.

ABR does derive a significant chunk of revenue from chocolate distribution. Do chip in with observations on the local scene!

I think Cocoa Trees has little to do with the chunk of revenue. From their 2009 AR, the focus of the chocolate distribution arm is on selling to duty free outlets in Singapore and the region. Cocoa Trees is merely the retail arm of that distribution.

[yaosheng]

hi kazukirai, i get what you mean.

i was looking at their AR and their chocolates biz accounts for S$90m in FY2009. Looking at segmental results, overseas sales accounts for less than S$40m so I believe most of their chocolate revenue comes from singapore. i suppose the outlets at the airport should account for most of their Singapore chocolates sale but they do have quite a few other outlets spread out across Singapore.

[kazukirai]

hi kazukirai, i get what you mean.

i was looking at their AR and their chocolates biz accounts for S$90m in FY2009. Looking at segmental results, overseas sales accounts for less than S$40m so I believe most of their chocolate revenue comes from singapore. i suppose the outlets at the airport should account for most of their Singapore chocolates sale but they do have quite a few other outlets spread out across Singapore.

Hi Yaosheng-san,

I'm not sure if they only sell through the retail outlets, that's the thing. If they do, $50million worth of chocolate is a lot of chocolate to push in one year. It's not like the example cited in the OSIM thread where selling just a couple of chairs takes care of the overheads. Therefore, logically, if they only sell through Cocoa Trees, they should have customers spilling out of the shops which as you (and personally me too) have observed is not the case.

Assuming they aren't piling their warehouse full of the stuff, I'm thinking they must be selling the chocolates to other retailers as well.

[Zip113]

vested!

[yaosheng]

hi forumers, not sure how many of you follow ABR Holdings. It is a smallish company with 2 main sectors - restaurants (including Swensens) and chocolate distribution.

today there is an announcement that ABR is proposing to sell its stake in the chocolate distribution business. The gain on sale is huge (80mn vs mkt cap of 130mn) but i am rather doubtful abt mgmt's plans on usage of funds from sale.

[bluechipstamp]

ABR is selling its crown jewel away. The choc distribution business (or Focus Network, which was originally from Duty Free Shop) posted excellent numbers when I last looked.

Short term investors will be happy, cos they'll receive a special div from this realization. Long term investors are short-changed, however. A good business like Focus Network is worth more than 13.8 x 2010 earnings (P/E is prbly much less for 2011 earnings, which hasn't been announced). If I'm vested, I would have much preferred to participate in Focus Network's earnings over the long term.

There isn't a choice though. The purchasers are the husband/wife founders of Focus Network. If you don't sell, will they still be motivated enough to work for just a minority stake? Unlikely.

[opmi]

CK building on fire. ABR building next to it.

https://goo.gl/maps/X3rVFm9Xtc42

[dydx]

CK building on fire. ABR building next to it.

https://goo.gl/maps/X3rVFm9Xtc42

Free smoking for food items stored in ABR's building next to it..so smokey-flavour Swensen's ice-cream..

[karlmarx]

ABR continues to register stable earnings:

http://www.sgx.com/wps/portal/sgxweb/hom...ouncements

Earnings for the past four quarters totaled $4.4m on revenues of $105m and equity of $100m:

1Q17: $1.1m
4Q16: $1.2m
3Q16: $1.3m
2Q16: $0.8m

Based on this, net margins are ok at near 5%, but ROE is tiny at 4.4%. But if we remove the $80m cash --
which it does not need for non-expansion operations, and it has negligible debt -- from the equity, we will get an ROE of about 23%, which is pretty alright for an f&b outfit.

ABR is currently valued at $146m based on the last traded price of $0.73. Removing the cash from the market value, the f&b operations are valued at $66m, which gives a last twelve months p/e of 13.2. It doesn't seem attractive.

But probably the greatest risk to ABR is from within. From the quarterly comments, the desire to pursue property investment as a core feature of the group is clear, even though the last announced deal has been aborted. Seems like growth for ABR's f&b operations has slowed or stopped, and management is focusing on growth through property. After all, property allows one to put to work massive capital easily, and without the day-to-day oversight of operations that is required of f&b.