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10 Things Investors Should Know About Kimly Ltd’s Latest Earnings Update

Yesterday, Kimly Ltd (SGX: 1D0) released its 2019 first-quarter earnings update. Kimly is one of the largest traditional coffee-shop operators in Singapore. It currently operates a chain of 67 food outlets and 129 food stalls under various brands island-wide. It was listed on 20 March 2017.

Here are 10 things investors should know from the company’s latest earnings update.

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  1. Revenue for the reporting quarter grew by 5.0% year on year to S$52.6 million.
  2. Gross profit improved by 4.4% year on year to S$10.6 million.
  3. Yet, net profit attributable to shareholders for the quarter fell by 8.2% year on year to S$5.3 million.
  4. Similarly, Kimly’s earnings per share (EPS) also fell by 8.0% to S$0.46.
  5. The company’s gross margin remained stable at 20.2%, as compared to 20.3% in the same period last year.
  6. In the reporting quarter, Kimly generated operating cash flow of S$20.9 million, up from S$7.8 million in the corresponding quarter last year.
  7. Kimly had no borrowings as of 31 December 2018, while its cash and bank balances stood at S$91.1 million.
  8. Kimly’s working capital position was a negative S$23.1 million at the end of the reporting quarter. (Working capital is defined as current assets less cash, and less current liabilities.)
  9. No dividend was declared for the latest quarter.
  10. In its earnings update, Kimly gave some useful comments on its outlook:

“The Group is fully committed to carrying out the various growth initiatives set out in its corporate and business update released on 18 December 2018. These include expanding its portfolio of coffee shops and product offerings, streamlining outlet operations, and further optimising its central kitchen.

In line with these strategies and as part of efforts to reach a wider consumer segment the Group opened another Rive Gauche outlet (located at Clifford Centre) in December 2018, bringing its store count for the Japanese-French confectionery brand to 10. This is the first store opened under the Group’s management following its acquisition of Rive Gauche in July last year.

As part of efforts to cater to the public’s preference for healthier dining options, the Group is developing its own brand of iced Kopi and iced Teh for sale at all its coffee shops. This is expected to be completed by March 2019. Having successfully pioneered its first innovative coffee shop, located at Bukit Batok, Kimly expects to introduce similar features in a number of other outlets this year. The Bukit Batok outlet is equipped with an automatic conveyor belt tray return system, self-service cashless payment kiosks, and a point-of-sale system that is integrated with enterprise resource planning software to provide real-time information on sales, inventory and customer dining patterns.

With these various initiatives in place, and barring any unforeseen circumstances, the Group expects to remain profitable for FY2019.”

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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 Lawrence Nga doesn’t own shares in any companies mentioned.