When it comes to food, Singaporeans will endure long queues and travel long distances around the island just for delicious fare. As Singapore is a multi-racial society, our food choices here are also wide and varied. It got me thinking as to which food and beverage companies were listed, particularly those in the restaurant business (either quick service or full service). Would these restaurant stocks be as appetising an investment as the food they dish out?
I compiled the list below, which shows a total of 11 food and beverage cum-restaurant stocks as well as their year-to-date price performance.
The two companies with the best share price performance are Soup Restaurant Group Ltd (SGX: 5KI) and RE&S Holdings Ltd (SGX: 1G1). I decided to dig a little more into these two companies to see what they have been serving up to investors.
Soup Restaurant Group Ltd
Soup Restaurant Group Ltd, or Soup Restaurant for short, operates many well-known food and beverage brands such as “Soup Restaurant” (famous for its Samsui Ginger Chicken), “POTLUCK”, “CAFE O” and “SAMSUI”. The group currently has 20 outlets in Singapore, Malaysia, and Indonesia.
The group reported a mixed first quarter of 2019, with revenue up 7.2% year-on-year but net profit down by 22.4%, mainly impacted by significantly higher depreciation and amortisation expenses. Operating cash flow remains healthy though, and Soup Restaurant plans to increase productivity by widening its distribution network for its consumer goods and ready meals through the central kitchen located in Changi Prison Complex.
On 17 April, the group also announced the opening of its new casual dining concept “Samsui” restaurant located in the newly-opened JEWEL at Changi Airport. Soup Restaurant had just increased its full-year dividend from 0.50 Singapore cents in FY 2017 to 0.65 Singapore cents in FY 2018, for a historical dividend yield of 3.5%.
RE&S Holdings Ltd
RE&S Holdings Ltd, or RE&S for short, is an owner and operator of multiple F&B outlets in Singapore and Malaysia with different food concepts that provide customers with authentic Japanese cuisine. The group has more than 1,600 employees, a central kitchen in Tai Seng, more than 70 F&B outlets and a diverse portfolio covering 20 brands such as Ichiban Boshi, Kuriya Dining, and Ichiban Sushi.
In its latest earnings release, the RE&S displayed significant revenue growth of 10.5% year-on-year in its quick-service restaurant segment, though this was slightly offset by a 3.2% decline in its full-service restaurant revenue. Net profit after tax soared by 44.8% year-on-year for the third quarter of 2019 ended 31 March 2019. Investors are probably betting on continued growth and solid performance for the group. RE&S declared a 0.4 Singapore cent first and final dividend in its previous fiscal year and its historical dividend yield stands at 2.1%.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Royston Yang does no own shares in any of the companies mentioned.