Singaporeans love going out to eat. Food can be considered a national obsession with people willing to queue hours to try a popular dining spot. According to data from the Department of Statistics Singapore, the total sales volume of food and beverage services in the single month of May this year was estimated at a whopping S$689 million. More striking is the fact that operating receipts per square metre of retail space has grown from S$4,726 in 2006 to S$7,138 in 2016. This data could grow with the busy lifestyle of Singaporeans, making investing in the F&B industry a tasty prospect.
Including the recently listed food court-operator, Koufu Group Ltd (SGX: VL6), there are now 13 restaurant stocks in Singapore. With that, here’s a quick introduction to the three best-performing restaurants stocks in the last 12 months.
Tung Lok Restaurants (2000) Ltd (SGX: 540) is first on the list with a 12-month return of 61.7%. Tung Lok’s restaurants are renowned in Singapore for their unique dishes. The firm operates 43 outlets, including well-known brands such as Dancing Crab, TungLok XiHE Peking Duck and Tunglok Signatures. Tunglok Signatures was awarded a Michelin Guide restaurant in 2017.
However, not everything has been smooth sailing for the company. Tung Lok’s share price plummeted mid-way through last year due to the announcement of operational losses in the first half of FY18 (year ended on 31 March 2018). Over the last few years, its earnings have also fluctuated erratically.
In the second half of 2018, though, the company fared better and returned to profitability, earning S$1.9 million. In addition, market participants have reacted positively to news of the possible roll-out of new brands in new geographical markets. This will help to reduce the over-reliance on Singapore. At its current price of 21 cents per share, the company has a price-to-book ratio of 3.7.
BreadTalk Group Limited (SGX: CTN) comes in at second place with a 12-month return of 44.5%. BreadTalk, despite its relatively small market capitalisation of S$625 million, is perhaps one of Singapore’s most recognisable companies. It operates iconic restaurant and bakery brands such as its namesake BreadTalk, Toastbox and Din Tai Fung.
The group had a good 2017, reporting a 91% surge in net profit, driven by its core F&B business, cost control and certain divestment gains. It also used the year to stabilise its balance sheet, reducing its net debt to S$41.4 million from S$60.7 million a year ago.
At the time of writing, shares of BreadTalk exchanged hands at S$1.11 per share, giving it a price-to-book ratio of 3.4, a price-to-earnings ratio of 51.1 and a dividend yield of 1.8%.
Japan Food Holdings Ltd (SGX: 5OI) completes this list with a 12.5% return over the past 12 months. As its name suggests, the company operates Japanese restaurants such as Ajisen Ramen, Botejya and Keika Ramen, with operations in Singapore, Malaysia and Vietnam. In the last quarter ended 31 March 2018, Japan Food posted strong numbers, with revenue and net profit growing 11.4% and 73.1% respectively.
It also has been consistently increasing its revenue each year with a compounded annual growth of 4.5% between 2011 and 2017. Its shares currently trade at S$0.515 each. This translates to a price-to-book ratio of 2.6, a price-to-earnings multiple of 16 and dividend yield of 4.1%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Jeremy Chia doesn’t own shares in any companies mentioned.