4 Things Investors Should Know About Newly-Listed Katrina

A new food & beverage company has joined the Singapore stock market’s Catalist board. Meet Katrina (SGX: 1A0).

The company’s shares first started trading on Tuesday and closed at S$0.34. At its current share price of S$0.345, Katrina’s shares are up by a huge 64% from its initial public offering price of S$0.21.

Here are few things I learnt about the company’s business from reading its IPO prospectus:

1. Company profile

Katrina Group is an operator of various brands of restaurants and cafes that serve either the casual dining or contemporary upmarket crowd.

All told, the company owns 32 restaurants in Singapore and two restaurants in China that are spread across nine brands (all are proprietary) of which four are Halal-certified.

Katrina’s brands include Bali Thai, So Pho, Streats, and Muchos.

2. Financials

As it is with most IPO prospectuses, Katrina’s contains a record of its finances for its last three completed fiscal years. The company’s fiscal year coincides with the calendar year.

Katrina finances table
Source: Katrina IPO prospectus

With reference to the table above, from 2013 to 2015, the company has displayed consistent revenue growth, but the same can’t be said about its profit. Its bottom-line has also grown at a slower pace than its revenue (a compound annual growth rate of 13.5% versus 8.5%).

Free cash flow has also grown from 2013 to 2015 as a result of an increase in operating cash flow as well as a decrease in capital expenditure. Meanwhile, the balance sheet has had minimal debt in relation to cash too, over the last three years.

3. Valuation

Based on Katrina’s current share price of S$0.345, it has a price-to-earnings ratio of 19 (based on its 2015 earnings and post-IPO share count of 231.5 million shares). For perspective, some of its industry peers such as Japan Foods Holding Ltd (SGX: 5OI) and ABR Holdings Ltd (SGX: 533) have trailing PE ratios of 16.6 and 17.6, respectively.

4. Growth Drivers and use of funds

According to its prospectus, Katrina’s IPO will see it raise S$7.5 million from the listing, of which S$5.07 million (67.4%) will be used for business expansion through the following ways:

  • “Increasing the number of restaurants for the “Halal” certified brands
  • Online food ordering and delivery business in Singapore
  • Geographical expansion into new regional markets
  • Forming alliances, acquisition and joint ventures”

The remaining 32.6% will be used to cover general working capital and listing expenses.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo does not own shares in any company mentioned.