Analysts are generally rather positive on food court operator Koufu following its FY2020 ended December 2020 results, which saw earnings fall by 64.3% y-o-y to $9.9 million as revenue dipped 19.2% y-o-y to $192.4 million.
The company plans to pay a final dividend of 0.7 cents. Together with the interim dividend of 0.5 cents already paid, the total FY2020 payout of 1.2 cents represents a payout ratio of around 70%.
As of end 2020, Koufu runs 48 food courts, 18 coffee shops and a commercial mall under the outlet & mall management segment, while its F&B retail segment constitutes 74 self-operated F&B stalls, 36 F&B kiosks, seven so-called quick-service restaurants, four full-service restaurants and 57 Delisnacks branded F&B stalls.
See: Koufu Group reports 64.3% drop in FY2020 earnings
SEE:Despite weaker results, DBS still likes Koufu as a recovery play
UOB Kay Hian is maintaining its “buy” recommendation on Koufu with a higher target price of 77 cents from 73 cents previously.
Analyst John Cheong notes that the group’s results came in below expectations due to higher impairment losses of $5.5 million and lower revenue due to lockdown measures, but is upbeat on the group’s outlook.
“We expect the earnings to continue to improve sequentially as seen in the 2HFY2020 earnings growth of 192% h-o-h, led by gradual sales recovery especially in heartland areas,” says Cheong.
Cheong also likes the stock as has the highest ROE and is the most profitable among local peers.
CGS-CIMB Research too has kept its “add” call on Koufu with an unchanged target price of 94 cents.
Analyst Cezanne See says, “We like Koufu as we deem it a resilient F&B play for its exposure to Singapore’s suburban heartlands. Moreover, a strong balance sheet (about $62 million net cash at end-December 2020) accords it dry powder to weather volatile times and/or to cash in on potential M&As.”
She notices that although footfall in Koufu’s heartland outlets are recovering, its food courts located at offices, downtown areas, tertiary institutions, and tourist hotspots were still seeing low footfall due to travel restrictions and work-from-home initiatives. Similarly in Macau, footfall remains low as tourist arrivals are still sluggish.
DBS Group Research too kept its “buy” recommendation as it sees a stronger outlook for the company.
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On the other hand, PhillipCapital has downgraded its call on Koufu to “accumulate” from “buy” previously with a lower target price of 68 cents from 77 cents previously.
Although there have been improvements in footfalls in Singapore and Macau and the group is marked for recovery in 2HFY2020, the consumption recovery may be slower than expected. Due to work from home being the default arrangement, consumption recovery at food courts near offices, downtown and in tertiary institutions remains slow.
Meanwhile, the group’s expected TOP of its integrated facility (IF) is delayed again to 1QFY2021, due to Covid-19 slowing down the shipment of building materials from Malaysia to Singapore. Management now expect to move into the IF and commence operation in 2Q2021.
Analyst Terence Chua says, “We continue to remain positive on the group’s outlook post circuit breaker. We believe the recovery in consumption post circuit breaker will continue to improve footfalls and revenue of the food courts and coffee shops in 2021. We expect the completion of the Group’s new IF in 1QFY2021 to yield cost savings and provide an additional revenue source from the rental of the balance 25% space.”
As at 4.15pm, shares in Koufu are trading at 66 cents or 3.3 times FY2021 book with a dividend yield of 3.7%, according to CGS-CIMB’s estimates
