Now, investors can expect Koufu to perform even better in FY19 based on the growing popularity of food courts, full-year contribution from its Rasapura food court at Marina Bay Sands as well as the opening of new outlets, says UOB KayHian in a new report.
Firstly, Singaporeans are switching to “other eating places’’ – which includes food courts and hawker centres but excludes restaurants, fast food outlets and caterers – amid the weaker economic backdrop.
In 4Q18, the segment grew of 3-4% y-o-y compared with 0% growth in 1Q18-3Q18, as suggested by Singstats data.
Secondly, Rasapura, Koufu’s largest contributing food court in terms of revenue, has reopened after being partially closed for refurbishment in 2Q-3Q18, lifting Koufu’s same-store sales growth.
Thirdly, Koufu has opened three new food courts in Singapore and one in Macau.
Lastly, its R&B Tea and Elemen outlets are expected to be on track to contribute a total of some $2 million in FY19 earnings.
“We believe the market has still yet to fully realise Koufu’s strong cash flow generation ability which has helped it build a significant cash hoard of $98.7 million as of 1Q19, equivalent to 25% of its market cap. In addition, the market has also not fully appreciated Koufu as the most-profitable listed F&B company,” says UOB lead analyst Joohijit Kaur.
UOB is maintaining its “buy” call on Koufu, with a target price of 95 cents or 16.7 times FY20F earnings.
As at 10.39am, shares at Koufu are up 0.5 cent at $74.5 cents .
