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20 Critical Numbers For A Deeper Understanding of No Signboard Holdings Ltd

No Signboard Holdings Ltd (SGX: 1G6), which was listed in November 2017, is a food and beverage outfit that mainly operates seafood restaurants. Other than operating restaurants, it has a beer business and a ready meal business.

The company released its annual report for the financial year ended 30 September 2017 (FY2017) recently. Here are some statistics that investors might want to know about from the report.

Financial Figures

For FY2017, No Signboard’s total revenue rose 7.3% year-on-year to $24.4 million. The better performance was mainly due to Danish Breweries, the beer business which was acquired in June 2017. This new acquisition contributed to four months of sales totalling $3.1 million.

Restaurant sales decreased 6.3% year-on-year to S$21.3 million due to a decline in overall customer count. Even though the overall customer numbers slumped by 15.9% year-on-year, a higher number of tourists with stronger spending power boosted average expenditure per customer from around S$94 in FY2016 to S$104 in the latest financial year.

In fact, the average spend per customer had increased yearly, from S$77 in FY2014 to where it was in FY2017, as seen below:

Source: No Signboard Holdings Ltd 2017 Annual Report

No Signboard’s gross profit margin fell from 78.6% in FY2016 to 75.7% in FY2017. However, it is still higher than the latest gross profit margin of 63.4% from JUMBO Group Ltd (SGX:42R); JUMBO Group is a competitor of No Signboard.

Net profit attributable to shareholders for FY2017 fell 1.3% year-on-year to S$7.7 million, mainly due to higher operational costs, and marketing expenses for the beer business. The management feels that “[s]ome of these costs are necessary as we build up the Beer Business but we are confident that the positive impact will outweigh the costs once the Beer Business gains traction and economies of scale set in”. The net profit margin for the latest year stood at 31.7%.

Return on equity for FY2017 came in at 45.8%, down from 46.4% seen a year back.

Cash flow from operations was at S$4.8 million and S$0.21 million was spent on capital expenditure for the latest financial year. Therefore, the company brought in S$4.6 million in free cash flow for FY2017, a decline from S$7.2 million generated a year ago.

Dividend

There was no dividend declared for the year.

According to its initial public offering prospectus, it intends to dish out at least 30% of its net profit after tax in 2018 and 2019 as dividends.

Growth Prospects

Looking ahead, the firm said the following with regards to its restaurant business:

“While we continue to grow our established business in the higher-end dining market segment, we are also looking to expand into new target markets. We are developing a new brand of casual dining restaurants to be located in satellite towns which will appeal to the younger crowd and those with families. We are currently exploring strategic locations to introduce this new dining concept, which we plan to launch two casual dining restaurants in the second half of 2018.”

For its ready meal business, it mentioned:

“In response to this evolving trend [of consumers paying for convenience], we have developed a line of ready meals that is under our Powered by No Signboard endorsement. These include No Signboard Seafood-inspired dishes, such as chilli crab spaghetti, hokkien mee and nasi bryani, which will be produced by our outsourcing partner and distributed via vending machines across Singapore. The Group will monitor the sales of its ready meals and will consider other distribution channels when such opportunities arise.”

As for the beer business, it launched its alcoholic drinks in portable pint bottles in December last year. If sales are positive, it plans to launch the beers in a small can format. It is also looking for a suitable location to build its own brewery to have “better control over the quality, production volume and faster response time to market”.

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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.