Background: Kitchen Culture specialises in the sale and distribution of a range of high-end imported kitchen systems, appliances, wardrobe systems, household furniture and accessories brands from Europe and the US since 1991. It holds exclusive distribution rights for eight of the 15 brands that it represents in Singapore and manages showrooms here and in Malaysia. About 92.7% of its FY10 revenue is derived locally and the rest from Southeast Asia.
Recent development: Last Friday, Kitchen Culture debuted on the Catalist through an IPO of 17m new shares placed out at $0.30 per share. This represents 17% of the company’s enlarged issued share capital of 100m shares.
Our View
Use of net proceeds. Kitchen Culture raised $3.7m in net proceeds from the listing, which will be used for general working capital and funding for future acquisitions or joint ventures. Management said that through this listing, it hopes to draw on the strength as a premium multi-kitchen brands holder and gain recognition over the other single-brand competitors in the market, thus making it easier to break into the Indonesian and Hong Kong markets. It has plans to secure more kitchen brand distributorships.
Robust orderbook. As of January this year, the company has $25.9m worth of residential projects contracts and $8.7m worth of distribution and retail projects, of which $2.6m have been fulfilled and the rest to be fulfilled in the next two years. It has worked with many reputable developers such as Hong Leong, City Developments and Far East Organization. Net profit margins are above 10% on average.
Dividend policy. Although it has no official dividend policy, the prospectus lists that Kitchen Culture intends to pay out at least 20% of its net profit to shareholders this year and next. The stock currently trades at 7.6x PER and 4.4x P/B.
Key ratios…
Price-to-earnings: 7.6x
Price-to-NTA: 2.9x
Net cash/(debt) per share: $0.02
Net cash as % of market cap: 4.8%
Share price) S$0.315
Issued shares (m) 100
Market cap (S$m) 31.5
Free float (%) 17%
Recent fundraising activities IPO listing for 17m shares at $0.30 per share
Financial YE 31 Dec
Major shareholders CEO Lim Wee Li (74.7%), Exec Director Lim Han Li (8.3%)
YTD change NA
52-wk price range S$0.300-0.345
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