Introduction to Kimly Ltd.
Kimly Ltd., a stalwart in Singapore’s food and beverage sector, operates a wide array of coffee shops and food courts. Known for its prepared foods and drinks, Kimly has carved a niche for itself in the bustling Singaporean market. However, the company faces intensified competition and rising operational costs, which have impacted its financial performance in FY24.
Financial Performance Overview
Kimly’s FY24 financial results fell short of expectations, with revenue and core profit after tax and minority interests (PATMI) achieving only 97% and 90% of forecasts, respectively. Despite these challenges, the company declared a higher total dividend of 2.0 Singapore cents per share, reflecting a 75% payout ratio. Revenue saw a marginal increase due to new store openings, although this was counterbalanced by underperforming existing outlets.
Detailed Financial Breakdown
| Financial Metric |
FY24 |
FY23 |
% Change YoY |
2H FY24 |
% Change YoY |
% Change HoH |
| Revenue (S\$m) |
319.4 |
313.9 |
1.8 |
160.9 |
1.6 |
1.5 |
| Gross Profit |
90.6 |
88.9 |
1.9 |
46.4 |
0.1 |
5.3 |
| Operating Profit |
43.4 |
48.6 |
(10.7) |
22.1 |
(9.3) |
3.4 |
| Headline PATMI |
33.1 |
36.5 |
(9.2) |
15.6 |
(12.5) |
(11.1) |
| Core PATMI* |
31.7 |
34.0 |
(6.8) |
14.9 |
(10.0) |
(11.3) |
*Excludes one-off gains from the confectionery business disposal in FY23 and a corporate income tax rebate in FY24.
Revenue Growth Across Segments
Kimly’s revenue growth was primarily driven by the outlet management segment, which saw a 4% year-over-year increase to S\$127 million, attributed to new store openings and the securing of new cleaning contracts. The food retail segment experienced a slight uptick of 0.6% to S\$185 million, thanks to contributions from recent openings, although this was largely offset by closures and reduced contributions from existing food stalls.
Dividend Strategy and Cash Flow Management
The company declared a final dividend of 1.0 Singapore cent per share, bringing the total for FY24 to 2.0 Singapore cents. This represents a significant 75% payout ratio, up from 57% in FY23. Kimly’s strong cash-generative capabilities support this dividend policy, with stable net cash from operating activities amounting to S\$44 million, maintaining a healthy cash position of S\$98 million.
Strategic Initiatives and Market Expansion
Despite facing a competitive market and rising costs, Kimly is committed to expanding its food outlet network. In FY24, the company opened three new outlets, 11 stalls, and two restaurants, along with a new food court in Lucky Plaza. Additionally, the proposed acquisition of a coffee shop in Serangoon Central is expected to bolster FY25 earnings.
The expansion of Kimly’s central kitchen for Tenderfresh from 129sqm to 500sqm is a strategic move to meet the growing demand for halal food. The integration of automated machines into its mixed vegetable rice central kitchens enhances operational efficiency, helping to protect margins.
Financial Projections and Valuation
Kimly’s earnings forecasts for FY25 and FY26 have been revised down by 2% to S\$35 million and S\$36 million, respectively, due to anticipated higher labor costs. The target price has been adjusted to S\$0.34, based on a 12x FY25 projected price-to-earnings ratio, reflecting the persistent pressures from a challenging operating environment characterized by a tight labor market and rising rental and utility costs.
Potential Catalysts for Growth
Future catalysts for Kimly’s growth include potential higher-than-expected outlet expansions and earnings-accretive mergers and acquisitions. These developments could provide a significant boost to the company’s financial performance and market presence.
