How Does Neo Group Ltd Make Money?

It is important to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Neo Group Ltd (SGX: 5UJ) is involved in and how it generates its revenue.

Neo Group Ltd is Singapore’s leading catering group with over 25 years of experience. Listed in 2012, its brands now include the eponymous Neo Garden, Deli Hub, Orange Clove, Best Catering, umisushi and DoDo. As at 1 May 2017, it had a food retail network spanning 25 outlets all over Singapore.

Let’s take a look at the table below for the revenue contribution of each business segment for the financial year ended 31 March 2017 (FY2017):

Source: Neo Group Ltd Annual Report FY2017

The food catering business segment, which brought in the bulk of total revenue, is involved in events catering services under five catering brands. It also provides daily meal delivery services and Halal-certified food. In FY2017, this business segment served a total of 1,790 orders on the first day of Chinese New Year 2017, as compared to its previous record of 1,531 orders in 2016.

Moving on, the food retail business segment operates a chain of food retail outlets that specialises in Japanese cuisine. It also receives franchise fee from franchise outlets specialising in Japanese cuisine.

Next, the supplies and trading business segment supplies food ingredients used in the food catering business and the food retail business. Furthermore, this segment is involved in the import, export and wholesale of fruits, vegetables and meat products.

The food manufacturing segment is involved in the production, distribution and retailing of surimi-based seafood products, DoDo fishballs, and Joo Chiat Kim Choo rice dumplings.

Last but not the least, the other businesses segment is involved in designing, marketing and distribution of floral arrangements, gifts and hampers. It also manufactures bread, cakes and confectionery.

Now that we know the basics of Neo Group Ltd’s revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.

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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 Sudhan P doesn’t own shares in any companies mentioned.