From operating as a humble business on a pushcart by the pavement in the early 1960s to seeking a listing on the local bourse today, YKGI has come a long way.
While the group’s name, YKGI, may not be the most familiar, the F&B brands it operates have left a lasting taste in most Singaporeans’ mouths, with its legacy Yew Kee Duck Rice, XO Minced Meat Noodles, My Kampung Chicken Rice, as well as My Kampung Food Courts and the trendy Chicha San Chen bubble tea stores that are sporting long queues all across Singapore.
YKGI has a total of 73 food outlets and four food courts under its belt. And it all started from a simple push cart in Nee Soon, say siblings Seah Qin Quan and Seah Kun Miao, the CEO and marketing director, respectively, of YKGI. They are also the third generation to manage their family’s business, taking over the mantle from their grandfather, who operated the pushcart, and their father, who popularised the brand.
In an interview with The Edge Singapore, the siblings share that they have learned much from their father, Seah Boon Lock, the company’s executive chairman.
However, with the new generation comes a new mindset and improvement. “My father’s and my grandfather’s mindset are quite simple. They believe that things will work out well if you work hard and aren’t lazy. But the game today is different, with lots of technology involved,” says Kun Miao.
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Siblings Seah Qin Quan (right) and Seah Kun Miao helm YKGI as CEO and marketing director, respectively. Photo: Albert Chua/The Edge Singapore
“Also, last time, it probably was harder for my father because he had to go through a lot of trial and error. We are luckier because he has passed down his experience and knowledge to us. It helps us save time and minimise risk,” she adds.
While the Seah siblings appreciate the groundwork laid out by the previous generation, they are eager to implement new ideas they have. Some ideas have reaped appetising returns, especially the acquisition of the master franchise for the Chicha San Chen bubble tea brand from Taiwan. They have also started new concepts such as PastaGo and Victoria Bakery.
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As the siblings discussed their expansion plans with their father, the family decided that it was time to take the company to the next level. Hence, YKGI is going public.
New recipe for expansion
YKGI registered its IPO on the Catalist board of the Singapore Exchange on Jan 26, seeking to raise about $16.55 million in gross proceeds by offering 82.75 million shares at 20 cents each. The offering consists of 53.75 million new shares and 29 million sold by the current shareholder Seah & Family. The placement shares will represent approximately 19.5% of YKGI’s enlarged issued share capital of 425 million post-IPO.
Separate from the placement, individuals Teo Kee Bock and Huan Yong Group have each entered into a cornerstone subscription agreement with YKGI to subscribe to new ordinary shares in the company worth $2.0 million and $1.25 million respectively. Based on the placement price, Teo and Huan Yong Group will be issued 16.25 million cornerstone shares.
Teo is better known as the founder of the Super Group group of companies, which he has sold. He now runs his family office, Apricot Capital, with his family. Huan Yong Group is an investment holding vehicle of the Te family, whose patriarch, Ronald Te Kok Chiew, was a co-founder of Super Group together with Teo.
Based on the placement price of 20 cents per share and the group’s share capital immediately after the IPO, the market capitalisation of YKGI is expected to be approximately $85.0 million. The IPO price of 20 cents values the offering at 9.52x historical earnings, based on EPS of 2.1 cents per share recorded for FY2021. Similar listed F&B companies, such as Japan Foods and Kimly, trade at 10.5x and 12.8x times historical earnings, respectively.
YKGI plans to use the proceeds to open new outlets in Singapore and overseas, expand into more market segments, strengthen its supply chain capabilities, expand franchising and sub-franchising operations, and undertake strategic acquisitions and joint-venture partnerships.
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This IPO does not have a public tranche, and the placement closed at noon on Feb 1. Listing and trading of YKGI’s shares are expected to commence at 9am on Feb 6. RHT Capital is the issue manager and full sponsor for the IPO. Evolve Capital Advisory and KGI Securities (Singapore) are the joint placement agents.
“We initially wanted to offer a public tranche, but the placement was very well received, so we realised there wasn’t a real need for that. We saw a good response during the book-building process,” says Qin Quan.
YKGI has reported steady growth since its FY2019 ended December 2019. In FY2019, YKGI reported revenue of $31.6 million, which increased by 23.4% in FY2020 to $39 million. For FY2021, revenue grew by another 43.9% y-o-y to $56.1 million as the company set up more outlets. Earnings, meanwhile, were $1 million in FY2019. They surged to $4.9 million in FY2020 and $8.9 million in FY2021.
For the most recent 1HFY2022 ended June 30, 2022, revenue was down 3.1% y-o-y to $26.8 million. The company attributes the dip to easing Covid-19 restrictions, which led to lower revenue from its outlets, mainly located in the heartlands, as more people resumed commuting. In addition, government subsidies as part of the nationwide package of support measures for businesses and households hit by Covid-19 had tapered off. Earnings for the same period were down by 36.8% y-o-y to $2.4 million.
YKGI does not have a formal dividend policy, although it plans to pay at least half of its earnings from the current FY2023 and the coming FY2024 as dividends.
Expanding appetite
Several expansion plans are already in the works, most immediately the upgrading of the group’s central kitchen.
“We’ve got more brands coming in, so we need a bigger space [and a] better process. Our central kitchen currently supports the cooking of the braised duck for Yew Kee Duck Rice. It also serves as our warehouse. The upgrade will enable it to support the other brands under our group,” say the siblings.
Beyond Singapore, the siblings are also looking to expand their businesses abroad, focusing on the Southeast Asian region. When asked to elaborate, the siblings say they will keep their options open while aiming to open their first outlet overseas within the next five years.
According to Qin Quan, they are looking to introduce their concept store, Yew Kee Specialities, overseas. The store, located in Suntec City, brings together two of the group’s brands, Yew Kee Duck Rice and Chicha San Chen, in one location.
“We think it’s a good idea [to introduce this concept] overseas,” says Qin Quan, adding that it is popular among the group’s customers in Singapore. “Not only are there two brands sharing the same unit, thereby saving costs, but we also hope to replicate this overseas.”
The siblings are eyeing mergers and acquisitions as a way to grow too. “We have been actively looking out for brands that we’re keen on working with… Whether it’s a partnership or [an] acquisition, we’ll see how it goes,” they share.
Yet, it is not about simply expanding their footprint in the market. They add: “[With every brand], we’re building on our foundations; it’s not just about expanding the group. Every brand is like a baby; we must nurture and grow it together. We want to ensure every brand is done properly before moving on to the next one.”
