Koufu Group Limited Post Result Announcement

Koufu Group Limited has released its FY2020 results on 23rd February 2021. In this article, we will be looking at the highlights of their result announcement and the management outlook for the group.

About Koufu Group Limited

Established in 2002, Koufu Group Limited (“Koufu”) is one of the most established and largest operators and managers of food courts and coffee shops in Singapore, with a presence in Macau, Malaysia and Indonesia.

Koufu’s business comprises two business segments – outlet & mall management and F&B retail. Under the outlet & mall management business segment, Koufu operates and/or manages food courts, coffee shops and a commercial mall. Under the F&B retail business segment, it operates self-operated F&B stalls located within its food courts and coffee shops or within third party food courts as well as F&B kiosks, quick-service restaurants and full-service restaurants, amongst others.

FY2020 Result Highlights

For FY2020, Koufu’s revenue was at S$192.4 million, which is a 19.0% year-on-year decline. The decline was mainly due to a decline in 2 main revenue segment - Outlet & Mall Management and F&B Retail business.

• Decrease contribution in fixed rental income from Outlet and Mall Management as the rental rebates by landlords were passed on to the tenants.

• Lower contributions from F&B retail business segments due to impact from the circuit breaker and Phase 1 periods, when dine-in services were disallowed.

• Temporary suspension of operations of 10 food courts, 3 quick-service restaurants (“QSR”), 2 full-service restaurants and 26 R&B tea kiosks/QSR during the circuit breaker and Phase 1 periods.

• Lower footfalls at food courts located near offices, down-town areas, tertiary institutions as well as tourist hot-spots due to work-from-home trends and restriction in tourist arrivals.

As a result, Koufu’s profit after tax suffered a year-on-year decline of 64.3% to just S$9.9 million in FY2020. Profit after tax margin also dropped by 6.6 percentage points to 5.1%.

Dividend

In conjunction with the result announcement, Koufu has proposed a final dividend of 0.7 Singapore cents per share.

Together with the interim dividend of 0.5 Singapore cents per share, the total dividend for FY2020 came in at 1.2 Singapore cents per share.

Based on Koufu’s current share price of S$0.665, the indicative yield stood at 1.80%.

Latest Development

The progress of the construction of the integrated facility has been delayed due to the COVID-19 measures introduced in both Singapore and Malaysia (where certain materials have been sourced from). However, the Group expects Temporary Occupation Permit (“TOP”) to be obtained in the first quarter of 2021 and to commence operations from the integrated facility by Q2 2021.

The Group will be occupying 75% of the total Gross Floor Area while the balance of 25% will be tenanted out. The Group has to-date achieved full tenancy for all central kitchen units assigned for tenancy.

Management Outlook

Mr. Pang Lim (庞琳), Koufu’s Executive Chairman and Chief Executive Officer, said: “We have emerged stronger as a business by working with strategic and complementary partners to reinforce our business and revenue streams. This includes the acquisition of Deli Asia, a traditional snacks and dough products business, to fast-track the Group’s revenue diversification and network expansion in complementary products; expansion into the Philippines, and finetuning of our business model in Indonesia, through master franchise/licence agreements. With the recovery in footfall and resumption of dine-in services locally in the third and fourth quarters of 2020, the Group continues to generate healthy profits in FY2020, backed by our strong balance sheet and cash-generative abilities.”

_“Although we are cognizant of the potential recurrence of COVID-19 related restrictions, with the uncertainties in full pandemic recovery, we continue to be confident in Koufu’s resilient and defensive business model. The provision of essential F&B products is supported by revenue diversification with the expanded portfolio of Deli Asia’s Dough Culture and Delisnacks. We are also looking forward to our integrated facility which is on track for TOP in Q1 2021 and to commence operations by Q2 2021. The Group will be occupying 75% of the total Gross Floor Area. We have made good progress, having achieved 100% tenancy for the central kitchen units to be tenanted out,” _added Mr. Pang.

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