SINGAPORE — Kimly Limited, one of Singapore’s largest coffee shop chain operators in Singapore, announced on Tuesday (June 11) that it has exercised the option to purchase a coffee shop property located at Serangoon Central priced at S$13.15 million.
The proposed acquisition will be made through the company’s wholly-owned subsidiary, Choh Dee (S204) Food House from Lee Quan Enterprises. The property at Block 204 Serangoon Central, is a two-storey HDB shophouse unit comprising a coffee shop on the ground floor and a three-room HDB flat on level two.
The property has a strata floor area of 358 sqm. With a 90-year leasehold that commenced on October 1, 1994, the property has a remaining lease term of approximately 60 years.
The proposed acquisition for the Serangoon Central coffee shop is expected to complete on or around Dec 10 2024, or four weeks after the unconditional approval has been granted by HDB.
In a filing to the Singapore Exchange (SGX) on Tuesday, the company explained that the proposed acquisition is in line with the group’s strategy to expand its network of food outlets in Singapore and to establish new food outlets and food stalls as and when suitable strategic locations become available.
“The Group expects to strengthen its presence in the market by opening more food stalls under its food retail division, which is complemented by its central kitchen, and will continue to explore opportunities to acquire and/or operate more strategically-located coffeeshops in mature estates with established footfalls,” said the company.
The book value of the coffee shop property at Serangoon Central is S$14 million, and it includes a stamp duty of S$890,000. An independent valuation report by GB Global completed on June 7 this year, commissioned by Kimly, had put the market value of the property at S$13.7 million. Kimly added that the purchase will be “satisfied by way of cash and funded by the company’s internal resources.”
The proposed acquisition is subject to the coffee shop being sold with a condition of tenancy ending on 31 August 2025, which will be transferred upon completion; as well as the written approval of HDB and, including other the relevant authorities.
If HDB approval is not obtained by Sep 10, Choh Dee (S204) or Lee Quan Enterprises has the option to rescind within a seven-days notice. All monies paid by Choo Dee (S204) to Lee Quan Enterprises shall be refunded without any interest or deductions and neither party has any further claims or demand against the other.
The groups said that the proposed acquisition of the coffee shop property at Serangoon is not expected to have any significant impact on their financial performance for the current financial year.
Kimly’s group currently operates and manages an extensive network of 86 food outlets, 172 food stalls, 12 Tonkichi, as well as Tenderfresh restaurants and four Tenderfresh kiosks across the heartlands of Singapore.
Kimly’s first half financial year 2024 report revealed a net profit of S$16 million, accompanied by a significant 1.9% revenue growth. The S$158.5 million revenue was driven primarily by the performance of the group’s outlet management and food retail division. The group’s gross profit margin also saw an increase of 0.5% to 27.8%, compared to 27.3% in 1H FY 2023.
In the report, the group noted that; “Singapore grapples with numerous challenges amid a competitive landscape and soaring operational expenses.”
It added, “F&B establishments are expected to struggle with the ongoing manpower shortages, despite offering higher pay to attract and retain talent. Additionally, escalating costs of raw materials and utilities pose a significant hurdle, putting considerable strain on food outlets to offer competitive prices while ensuring sustainable profitability.”
Despite facing a challenging economic environment, Kimly which is listed as 1D0 on the SGX, declared an interim dividend of one cent per share, marking an increase of 78.6% as compared to 0.56 Singapore cents per share in 1H FY2023. At closing of business on Wednesday, June 12, Kimly shares are trading at 0.32 cents.
TISG/