Many years ago, my parents told me that we were going to No Signboard Seafood, which is run by No Signboard Holdings Ltd (SGX: 1G6). I was confused and was thinking to myself, “Where is this place without a signboard?”
Only when we reached the restaurant did I find out that the name of the restaurant was indeed No Signboard Seafood. This is perhaps one of the most befuddling restaurant names I have ever come across. Despite its confusing name, this small restaurant has still managed to make a name for itself, with Singaporeans now recognising it as one of the top seafood restaurants in our country.
Late last year, the company took the next step to expand its business by listing on the local stock market. With that, here are some things that investors should know about the company.
Who says hawker stall owners cannot have big ambitions? This is precisely where it all began for No Signboard. Its founder Mdm Ong Kim Hoi started a seafood hawker stall selling seafood and crab dishes. The stall grew in popularity due to its now famous white pepper crab dish. As the stall literally had no signboard, it became known as No Signboard Seafood hawker stall, and hence, the name was born.
In 1998, the current chief executive officer Sam Lim, Mdm Ong’s grandson, joined the family business as a general manager and under his leadership, the company transformed from a hawker stall into a chain of seafood restaurants.
A closer look at its business
The group currently has two main businesses, its restaurant business and its beer business. It operates three No Signboard Seafood restaurants, which is where it derives the bulk of its revenue from.
Out of the S$6.7 million in revenue for the second quarter ended 31 March 2018, 76% or S$5.1 million came from its restaurant business. The other S$1.6 million came from its beer business. This segment of its business came about through the acquisition of Danish Breweries in June last year. Its beer business comprises of the sale of its Draft Denmark brand of beers. It also distributes third-party brands of beers.
Challenging retail environment
As with most retailers in Singapore, No Signboard has faced challenges in recent times. Revenue for the latest second quarter grew 19% from a year ago. The growth was, however, due to contributions from the beer business, which was acquired in June 2017. Its restaurant business, on the other hand, faltered as revenue declined 9.8%.
Worryingly, this is a continuation of a longer-running trend. In its financial year 2016 and 2017, revenue from its restaurants declined 10.2% and 6.2%, respectively, mainly due to lower customer volume.
The Foolish bottom line
No Signboard Seafood has grown from its humble beginning into a chain of restaurants that most Singaporeans would be familiar with. However, it is not without its limitations. Like other restaurants operators in Singapore, the company has faced stiff challenges from competitors and rapidly changing consumer behaviour. At its current price, it trades at a price-to-book ratio of 3.0 and a price-to-earnings multiple of 9.8.
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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 Jeremy Chia doesn’t own shares in any companies mentioned.