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Friday, November 27, 2020 – 8:45 am
FOOD AND DRINK (F&B) plays Jumbo Group 42R It is seeking to acquire a 75 per cent stake in the popular Kok Kee Wanton Noodle meatball noodle stand for S $ 2.1 million in cash and shares.
Separately, Jumbo slipped into the red for its fiscal year that ended September 30, 2020 when the coronavirus pandemic took a heavy toll on the food and beverage sector, according to results released Thursday night.
The Kok Kee deal will mark the group’s first inorganic expansion since it went public in 2015.
Jumbo, whose portfolio of F&B brands includes Jumbo Seafood, Ng Ah Sio Bak Kut Teh and Zui Teochew Cuisine, said it plans to expand Kok Kee’s network locally.
It also intends to introduce the “heritage local dish” of rampant with it, or Chinese dumpling noodles, to geographies beyond Singapore.
Kok Kee’s owner, Leong Goh Lian, will continue to hold the remaining stake in the room if the acquisition goes through.
The purchase price of S $ 2.1 million was determined after arm’s length negotiations, taking into account factors such as Kok Kee’s existing assets, intellectual property rights and business prospects.
Jumbo will use its internal resources to pay 70 percent of the purchase price in cash, while 30 percent will be satisfied with the award and issuance of Jumbo shares based on an agreed formula. The purchase price will be paid in two lump sum installments.
The food stand business operating under the name Kok Kee Wanton Noodle and the trademark used in association with it began in 1985 as a stand at Lavender Food Square in Singapore. It was later moved to the Hoa Nam building in Jalan Besar, but it ceased operation between 2016 and 2019 before reopening at its current location at the Bistro 8 cafeteria at 30 Foch Road.
Jumbo said Kok Kee’s business, known for its stretchy noodles and butter-based sauce, is a household name among many Singaporeans.
The Catalist-listed firm said it is continually exploring opportunities to expand its brands and concepts to strengthen its presence in Singapore’s F&B sector.
“Food and street vendor culture is a deeply ingrained aspect of the lives of all Singaporeans. Supporting and participating in a concept of everyday staples will accelerate Jumbo’s advancement in the local mass segment,” he noted. Jumbo in your bag file.
The proposed acquisition will also allow Jumbo to diversify its revenue streams away from its current dominant concepts, which revolve around full-service dining restaurants, he added.
“Jumbo is cautiously optimistic about the future prospects of Kok Kee and the business, as it is primarily targeting the mass local market, well suited for fast food or takeout,” the company noted.
Its chief executive and chief executive officer, Ang Kiam Meng, said Singapore’s unique food culture must be preserved and propagated.
Meanwhile, Jumbo reported a net loss of approximately S $ 8.2 million for the financial year ended September 30, reversing a net profit of S $ 11.7 million in the prior year.
Loss per share stood at 1.3 Singapore cents for fiscal year 20, compared to earnings per share of 1.8 cents for fiscal 2019.
Revenue fell 36.5 percent to S $ 97.6 million, from S $ 153.6 million a year ago, primarily due to the impact of Covid-19.
In China, government-imposed restrictions “significantly impacted” the group’s operations there, while the resulting subdued consumer sentiment also led to less crowds in shopping malls, which in turn resulted in a drop in sales. sales at Jumbo outlets. As such, revenue from the Chinese New Year season was “significantly lower” than revenue from previous years, the company added.
Additionally, it closed an underperforming Jumbo Kitchen store in Raffles City, Shanghai, before its lease expired.
In Singapore, the “circuit breaker”, which started in April and lasted until June, banned meals, meaning that Jumbo operated only six of its 16 stores in the country, serving only deliveries and takeout.
The company’s Singapore outlets in tourist areas, such as Ng Ah Sio Bak Kut Teh at Marina Bay Sands and Resorts World Sentosa, remained closed until July. Two of its top-grossing Jumbo Seafood outlets, at Riverside Point and The Riverwalk, also saw “visibly less footfall” as they had been popular with tourists.
No dividend was declared for the last fiscal year. The group had declared a final dividend of 0.7% per share for fiscal year 2019.
Jumbo shares ended Thursday unchanged at S $ 0.32, ahead of the announcements.
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