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No Signboard Holdings
11-11-2017, 09:29 PM,
Post: #1
No Signboard Holdings
Preliminary Offer Document for No Signboard Holdings

http://www.sgx.com/wps/wcm/connect/4ea8b...2df0a05383

1) No Signboard Holdings's (NSB) business (3 outlets in Singapore) enjoys very high net margins of between 26%-36% over the past 3 years. Balance sheet is un-leveraged, and trade payable days is high at between 80+ days to 150+ days; in other words, the raw materials suppliers are financing its business. NSB's core business is good.

2) The company tried to go overseas through a franchisee in Jakarta in 2008. And then establishing their own restaurant in Macau later that year. And then another in Hong Kong in 2011. All overseas operations have since ceased. It seems that management is not as savvy in operating outside of home grounds. And as such, investors should not expect NSB to have a similar growth trajectory in profits compared to Jumbo. At least not from the expansion of its core business.

3a) The company intends to use the IPO proceeds to build its 1) beer manufacturing and distribution business. Currently, it subcontracts the manufacturing of its beer. Revenue of just under $1m was recorded for 9M17, and none for previous years. One of its distributors has recently terminated its distribution agreement, paying $1.1m as compensation. Are NSB's beer really that difficult to sell? One thing for sure, the beer market in Singapore is highly competitive. And whether NSB's beers can really sell, remains to be seen. Investors should not expect this segment to be (highly) profitable for the coming years.

3b) The company also intends to use the IPO proceeds to develop a ready-meals (microwaved food) business. Since there NSB does not have a central kitchen, their plan is to subcontract the manufacturing of these ready-meals to a third party, which has not been named. These ready-meals will be distributed through 'Ma2 Shops (vending machines),' which is 51% owned by NSB's largest shareholder GuGong. Personally, I think frozen and reheated food does not taste good. And for the same price, you can get a better-tasting meal from a coffeeshop or hawker. Such a business model is attractive to business owners because there is no labour to operate the premises, and rent is lowered. There are lots of places to eat in Singapore -- for all hours except midnight -- so what kind of consumers are they targeting, and is it sufficient? Figures from this segment are not found in the prospectus. Like the beer business, I think investors should not expect this segment to be (highly) profitable.

http://www.sgsme.sg/news/no-signboard-se...r-tampines

4) The listed entity operates 3 outlets, in Esplanade, Vivo City, and Clarke Quay. What about its first restaurant outlet at Geylang which was establised in 1995? It is franchised to Yak Nak Keow and Cheo Chia Kew; relatives of the two Lim Executive Directors. NSB receives $12k per month as franchise fees, but also pays $12k per month for the rental of space from the outlet to store live seafood. This outlet must be highly profitable, but is not part of the listed entity. Why does this arrangement exist? Probably different family members having different business opinions, and each wanting to run their own operations (and keep their own profits). 

There are good assets in this entity, but also some unproven ones. And as always, whether this will be a good investment depends largely on how much the shares are priced.

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11-11-2017, 10:55 PM, (This post was last modified: 11-11-2017, 11:09 PM by specuvestor.)
Post: #2
RE: No Signboard Holdings
Nice summary

IMHO No signboard also seems No Clue. They are also looking to expand to heartlands which I'm not sure they can maintain quality. Their franchise model for Geylang seems strange and looking to franchise in China. They just bought Draft Denmark in June, just Before 9M17 and already looking to invest into own brewery

Agree their trajectory is not comparable to Jumbo
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

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12-11-2017, 04:21 PM,
Post: #3
RE: No Signboard Holdings
(11-11-2017, 09:29 PM)karlmarx Wrote: 3a) The company intends to use the IPO proceeds to build its 1) beer manufacturing and distribution business. Currently, it subcontracts the manufacturing of its beer. Revenue of just under $1m was recorded for 9M17, and none for previous years. One of its distributors has recently terminated its distribution agreement, paying $1.1m as compensation. Are NSB's beer really that difficult to sell? One thing for sure, the beer market in Singapore is highly competitive. And whether NSB's beers can really sell, remains to be seen. Investors should not expect this segment to be (highly) profitable for the coming years.

Thanks for the insights. For any serious investor, its good to go through the whole prospectus in details. 

I am a beer drinker. And i have tried draft denmark. Its available in the neighbourhood coffeeshops. The conclusion is that its probably my first time and last time buying it. That should tell you something about the quality with respect to the retail price. 

Anyway the above is my own opinion. There are so many beer brands out there and competition is keen.
There are no good stocks. Stocks are only good when they go up after you bought them.

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12-11-2017, 09:07 PM,
Post: #4
RE: No Signboard Holdings
I'm no beer drinker. But if I were to partake in social drinking, I wouldn't choose an unknown brand. NSB has to spend a lot to market its beer.

Also, their plan to establish a 'chain of Chinese restaurants' under a 'new dining concept' in the heartlands has yet to be executed, and hence is again another unproven source of growth. But this idea has the highest chance of generating returns. If the concept is similar to Paradise but with fewer and inexpensive menu items, at lower prices, there may be a market for it.

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13-11-2017, 06:44 AM, (This post was last modified: 13-11-2017, 06:53 AM by holymage.)
Post: #5
No Signboard Holdings
No Signboard is not a "Jumbo" if one dig into the unit economics. Don't be deceived by the high margins and the big name cornerstone investors backing. Think deeper about the financials provided in the preliminary prospectus.. It would be best to go and eat at both restaurants and one will find out that Jumbo is much more better managed in terms of brand building. I think the unlisted Mellben seafood is also better managed for that matter.

Sent from my SM-G930F using Tapatalk

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