Kimly

[karlmarx]

3. So who cooked up the plan? My best guess is both parties, it takes too hands to clap but from my perspective, it is unlikely a coffeeshop chain would hatch or initiate such an elaborate plan.

Between his top job at Pokka, and building and selling ASC to Kimly, it does not seem to make sense (to me) for Ong -- in terms of risk and reward -- to ditch the former for the later. I mean, the guy is probably worth a few millions. Why take so much risk for just a couple of millions more?

[Big Toe]

3. So who cooked up the plan? My best guess is both parties, it takes too hands to clap but from my perspective, it is unlikely a coffeeshop chain would hatch or initiate such an elaborate plan.

Between his top job at Pokka, and building and selling ASC to Kimly, it does not seem to make sense (to me) for Ong -- in terms of risk and reward -- to ditch the former for the later. I mean, the guy is probably worth a few millions. Why take so much risk for just a couple of millions more?

1. There is always the big loan that was taken up to pay for the landed property among other things.

2. Top job, esp a local and regional role do not equate to top pay. I know of private companies that are larger than Kimly but the top guy get paid peanuts. Of course the top guys have shares in the group of companies which maybe worth hundreds of millions. Pay is secondary. Does Ong own a significant stake in Pokka, unlikely.

3.  The other question is valuation of ASC, $16M, not a lot of money in corporate terms but a lot of money if you think how it is created from thin air and is a failed business. It is just a tiny leech feeding on Pokka's resources. Then again failed businesses that burn hundreds of million with no path to profitability can be valued at billions, so this may not be so far fetched after all in the world we currently live in.

Valuation models are so advanced now, new metrics are created to make everyone feel good about themselves and push valuations to space and beyond. This is true in the PE space where too much money is chasing after too few quality investments.

[cyclone]

Acquisition of Coffeeshops and Industrial Canteen Outlets

Kimly Limited (“金味有限公司”) plans to acquire interests in several coffeeshops and industrial canteen unitsfor an aggregate consideration of S$59.0 million, which will result in the Group expanding its footprint to 81 outlets. The proposed acquisition is made in furtherance of the Group’s asset ownership strategy. 

The Proposed Acquisition
Jin Wei Food Holdings Pte. Ltd. (“Jin Wei”), a wholly-owned subsidiary of the Group, has entered into a non-binding term sheet ("Term Sheet") with a group of third party vendors (“Vendors”) to acquire their interests in a portfolio of coffeeshop leases, coffeeshop units and industrial canteen units (together, the "Target Properties").

The Target Properties comprise:
a) four long term leasehold coffeeshop units, which are HDB commercial units located within mature HDB estates;
b) three freehold industrial canteen units, which are located in mature and populated industrial areas in close proximity to residential areas; and
c) three short term coffeeshop leases, which are HDB direct leases.

The Term Sheet is non-binding, pending completion of due diligence and valuation of the Target Properties by the Group.

More details in :
1. https://links.sgx.com/FileOpen/Project%2...eID=582616
2. https://links.sgx.com/FileOpen/KML%20Hol...eID=582617

[¯|_(ツ)_/¯]

Kimly FY2020 Result as at 30 Sep 2020
Rev $210m (vs 208m)
GP  $ 56m (vs  40m)
NP  $ 25m (vs  20m)
Div 0.84cents (vs 0.84)

Moving ahead, the Group will be proactively looking for outlet acquisition opportunities which forms parts of our ongoing endeavors to pursue long term ownership of properties, mitigating the uncertainties in the private leasing category which could be influenced by market competition.

Barring unforeseen circumstances, the Group expects to continue growing its revenue base and remain profitable in the next financial year.
https://links.sgx.com/FileOpen/Kimly%20-...eID=640604

Stay home and stay safe, everyone.

[¯|_(ツ)_/¯]

Kimly 1H2021 Result
Rev S$122m (vs 107m)
GP  S$ 40m (vs  23m)
NP  S$ 21m (vs  10m)
Div 0.56cts (vs 0.28)

The Food and Beverages ("F&B") sector is on a path of steady recovery, following the serious and adverse impacts on
economic growth resulting from the COVID-19 pandemic last year. But the recovery is on a cautious note as the industry is
still expected to continue facing challenges arising from the competitive landscape. The reduction of the Foreign Worker
Quota (announced in the Budget 2019) coupled with increasing rental and raw material costs will pose mounting pressure
to the local F&B players. However, governmental support in the form of Jobs Support Schemes (“JSS”) announced during
this year’s Budget might provide the industry with a slight boost.

The Group will continue to leverage on technology and other innovative features in both its Central Kitchen capabilities
and at the operational front. These will boost productivity and reduce the reliance on labour in view of the tightening
Foreign Worker Quota and travel restrictions. In addition, the Group will stay focused in carrying out its four-pronged
growth strategy to overcome these challenges. These are: (1) expanding footprint and diversifying product offering; (2)
driving innovation and streamlining outlet operations; (3) synergising central kitchen operations; and (4) supporting
entrepreneurship and grooming the next generation of business owners to help increase tenant retention while hoping to
grow the local food culture.

The distribution and rolling out of vaccines at the start of the year is a positive sign towards economic recovery, with
many returning to the norm of dining out. Since Phase 2 of the economy’s reopening last June, footfall to the Group’s
coffeeshops, canteens and food courts has been steadily increasing following the slow return to pre-pandemic normalcy.

The Group has also been actively seeking out acquisition opportunities that are synergistic to its core business in order to
grow revenue and enhance profitability. The Group and Tenderfresh Fried & BBQ Chicken Pte Ltd (“Tenderfresh”)’s jointlyopened halal themed coffeeshop, KEDAI KOPI, has undergone enhancement work and was opened for business in
December 2020. KEDAI KOPI has been performing well since its opening. The Group is currently operating 83 food outlets,
representing an increase of 29.7% since its initial public offering on the Catalist of the SGX-ST in 2017.

As new strains of the virus have emerged in some parts of Asia this year, the Group will take precautions in ensuring the
safety of its staff and viability of operations while remaining mindful of the potential challenges that may arise again
should a second wave occur. Previous negative impacts were mitigated to an extent by grants from the government,
rental relief and property tax rebates from landlords. Nonetheless, the Group has adapted to these hurdles and is
constantly looking to innovate to stay ahead in this volatile economy by deploying new technology to leverage on
emerging trends. As it is difficult to predict how long the situation in Singapore would take to normalise given the global
lingering uncertainties, the Group will continue seeking for opportunities available in the market to grow its revenue
streams while monitoring the situation cautiously.

On 1 April 2021, the Group acquired 60% of the issued and paid-up share capital of a general cleaning solutions provider, Klovex Holdings Pte. Ltd.. With the pandemic elevating the importance of hygiene and cleanliness and
spurring greater demand for cleaners and cleaning services, this presented a great opportunity for the Group to
expand into the cleaning services industry to further increase its revenue streams. This acquisition allows the Group to
ride on the growing trend for cleaning services, potentially enhancing the profitability of the Group. The Group will
also be provided with an enhanced set of cleaning capabilities, where it will be able to deliver elevated standards of
cleanliness and hygiene at its operating premises for its customers.

The Group has entered into joint venture agreements with third parties to operate and manage the respective short-term coffeeshop leases at Block 134 Lorong Ah Soo, #01-454 Singapore 530134, Block 233 Bukit Batok East Avenue 5
#01-53 Singapore 650233 and Block 153A Serangoon North Avenue 1 #01-462 Singapore 551153. The Group will hold
49% stake in each of the joint ventures while the joint venture partners will hold 51% in the respective joint venture.
The joint ventures are in line with the Group’s strategy to expand its network of food outlets locally and to establish
new outlets and stalls as and when strategic locations become available. This will help the Group diversify and expand
its revenue stream and mitigate uncertainties in the private leasing category.

Moving ahead, the Group will continue exploring opportunities to increase its own portfolio of food outlets in mature
estates with established footfalls with the view of enhancing long-term shareholder value.

Barring unforeseen circumstances, the Group expects to continue growing its revenue base and remain profitable for FY2021.


https://links.sgx.com/FileOpen/Kimly_1HF...eID=665584

Stay home and stay safe, everyone.

[weijian]

Based on AR21, the 2 top earners of the company got 2.5-3mil in annual salary. Now that the consultant path is closed, how are they going to milk their baby? Since they own 41%, the logical way is to compensate themselves via more dividends? (for a quick comparison, total dividends paid out for FY20-13mil, FY21 to be paid out-24.5mil)

Kimly drops 2 convicted consultants after stakeholders raise concerns

Kimly Limited and its convicted consultants have mutually decided not to carry on with the recent engagement of the duo, following feedback and concerns from its stakeholders, the Catalist-listed operator of coffeeshops said.

In its regulatory statement it furnished on Saturday (Mar 12), Kimly said: "The board is grateful for and takes these feedback and concerns seriously, and will further evaluate and consider the matter together with its professional advisers, engage appropriately with stakeholders as well as take additional guidance from its sponsor and regulators."

Kimly had in its statement furnished on Mar 2 announced the engagement of former executive chairman Lim Hee Liat and former executive director Chia Cher Khiang as independent consultants, shortly after the duo were convicted of and fined in mid-February for breaching the Securities and Futures Act.

Kimly noted that Lim and Chia's shareholdings in the company amounted to 41.3 per cent, and that their interests are "aligned" with other shareholders in ensuring the group continues to perform well operationally and financially.

They were also disqualified from directorship for 5 years after pleading guilty to offences under the Securities and Futures Act.

https://www.businesstimes.com.sg/compani...e-concerns

[Ben]

Based on AR21, the 2 top earners of the company got 2.5-3mil in annual salary. Now that the consultant path is closed, how are they going to milk their baby? Since they own 41%, the logical way is to compensate themselves via more dividends? (for a quick comparison, total dividends paid out for FY20-13mil, FY21 to be paid out-24.5mil)

Yes, I think so too. In fact, Kimly has been steadily increasing their dividends over the years and looks set to at least maintain the current rate going forward.

OTOH, Lim owns a number of coffee shops that are rented out to Kimly. Will he increase the rental rates to cover the forgone salary/consultancy fee?

Curiously, I wonder who is/are the stakeholders who is/are powerful enough to influence the decision to not use Lim & Chia?

[weijian]

Based on AR21, the 2 top earners of the company got 2.5-3mil in annual salary. Now that the consultant path is closed, how are they going to milk their baby? Since they own 41%, the logical way is to compensate themselves via more dividends? (for a quick comparison, total dividends paid out for FY20-13mil, FY21 to be paid out-24.5mil)

Yes, I think so too. In fact, Kimly has been steadily increasing their dividends over the years and looks set to at least maintain the current rate going forward.

OTOH, Lim owns a number of coffee shops that are rented out to Kimly. Will he increase the rental rates to cover the forgone salary/consultancy fee?

Curiously, I wonder who is/are the stakeholders who is/are powerful enough to influence the decision to not use Lim & Chia?

FY22 paid out ~21mil, which is ~15% lower than FY21's 24.5mil. So the hypothesis that they may pay out more dividends to compensate for annual salary loss, either doesn't stand up to scrutiny or is just one minor aspect of many considerations to the dividend.

That said, a latest scan of their FY22 results suggest that inflation pressures are eating into their bottom lines. How much would they be able to pass on these increases to the end caipng customer/stall owner, or try to optimize their costs via scale?

Finally a very interesting question (in fact, only question) in their FY2022 AGM MoM (page 7):

Question (1): Is Lim Hee Liat and Chia Cher Khiang currently involved in any way in the operations, management and advisory in any form with Kimly? Company’s 

Response: Mr Lim and Mr Chia had resigned as directors as well as employees of the Company. However, Mr Lim remains as the Company’s substantial shareholder. Mr Lim and Mr Chia hold a total of approximately 41% shareholdings in the Company. Both Mr Lim and Mr Chia have reiterated their continued commitment and support to the Group’s growth and expansion and emphasise their confidence in the leadership and direction of the Board and management of the Company.

Question (2): Can the answers to the two questions by Karen in the AGM be posted in Kimly’s website and SGX announcements?

https://links.sgx.com/FileOpen/Kimly%20-...eID=745976

[weijian]

It seems like there are 1-2 aggravated shareholders dwelling on the prior conviction for failure to make the necessary disclosure in the AGC acquisition saga. There is no way the "2 EDs" will have "nothing to do" with the company. Ignoring their 41% stake, as per 2017 IPO prospectus there were another ~10 employees owning a post IPO stake of 14%. Of course, it is not clear whether this employee group collectively still hold onto similar % as of now.

I cannot imagine a scenario where they wouldn't be back once their 5year ban on holding directorships expire. Also Lim leases ~18 coffeeshops to Kimly and as a % of leasing costs, that is ~25% - which is substantial. What happens if Lim doesn't lease it to Kimly anymore? (not probable but possible)

OPMIs have to decide whether they are comfortable with their jockey (and in this case, ex jockey for the time being) and move on.

RESPONSE TO QUESTIONS FROM SHAREHOLDERS

The Board has previously considered this issue and decided no such course of action is required.

Mr Lim Hee Liat (“Mr. Lim”) and Mr. Chia Cher Khiang (“Mr. Chia”) have continued to share generously and freely with the Group their collective experience, knowledge, market intelligence and relationship with industry participants in the coffeeshop and F&B industry, whenever requested by the Group. This has often times been very valuable to the Board and management team as part of its consideration (amongst other relevant factors) in making any strategic and/or operational decision. For the avoidance of doubt, the Board and management has ultimate ownership over all decisions relating to the Group. Also, no compensation whatsoever is payable by the Group to either Mr. Lim or Mr Chia.

The Board is further confident that with their aggregate substantial 41.14% shareholdings in the Company, Mr. Lim and Mr Chia’s interests are strongly aligned with all shareholders in ensuring the Group continues to perform well and profitably. The Company benefits from tapping on such resource as part of its decision-making process.

https://links.sgx.com/FileOpen/Kimly%20-...eID=783311

[Ben]

Quoting Kimly response to the question on PWM:

“Payroll expenses are recognised in the period in which the related service is performed; hence, no provision was made. The PWM was implemented on 1 July 2023. The annual effect of the salary increment was estimated to be around 2.08% of the Group’s payroll expenses for FY2023, constituting approximately 0.8% of the Group’s FY2023 gross profit margin.”

Kimly didn’t mentioned about the Progressive wage credit scheme (PWCS), which is an assistance program given by government to help cushion the impact to companies due to the PWM.

https://www.iras.gov.sg/schemes/disburse...dit-scheme

This scheme will last for 5 years and government will co-fund the wage increases of workers affected. The co-funding is 75% (First tier where gross monthly wage is <=$2500) and 45% (Second tier where gross monthly wage is >$2500 to <=$3000) for the first 2 years and taper to 15% on the fifth year.

This is significant. I recon that majority of workers affected by the PWM should falls into the first tier, which means the net cost impact to Kimly for the first 2 years will be insignificant. From the 3rd years onwards, the productivity, efficiency, redundancy and selling prices would have already being adjusted to take in the increase in cost.

Total Govt grants received by Kimly from Govt for FY2023 and FY2022 were:
FY2023 - $2.155M (Outlet management $1.621M; Food retail $432K)
FY2022 - $1.274M (Outlet management $782K; Food retail $362K)

Since PWM started on 1 Jul 2023, PWCS has not been included in the above and so we can expect to see a significant increase in grants for FY2024 and FY2025.