DOMINUS Capital has exercised its right of compulsory acquisition from dissenting shareholders of Koufu at S$0.77 in cash per share.

 

In a midday bourse filing on Monday (Mar 21), UOB - which is acting as the financial adviser to Dominus Capital - said the company will become a wholly-owned subsidiary of Dominus Capital following the compulsory acquisition.

 

The date and time of Koufu' s subsequent delisting is expected to be announced by the company in due course.

 

Dominus Capital is an investment company incorporated last Oct 7 by Koufu' s executive chairman and chief executive Pang Lim and his wife Ng Hoon Tien, an executive director of the food court operator.

 

When the offer was first made as a voluntary conditional cash offer in December 2021, UOB stated on behalf of Dominus Capital that delisting Koufu from the Singapore Exchange mainboard would give both the offeror and the company greater control and management flexibility in deploying available resources and facilitating strategic initiatives or operational changes.

 

Trading in shares of Koufu has been suspended since Feb 24 after the duo' s offer to take the company private closed on Feb 24 with 98.19 per cent valid acceptances.

 

The deal had previously turned unconditional and crossed the threshold for compulsory acquisition on Jan 27 upon garnering valid acceptances in respect of 498.3 million offer shares, which translates to 90.12 per cent of Koufu' s issued shares.

AN offer from Koufu Group Koufu: VL6 -0.65% ' s founders to privatise the food-court operator has turned unconditional, with the total shares owned, controlled or agreed to be acquired by the offeror Dominus Capital and its concert parties amounting to 90.13 per cent of total shares as at 6 pm on Thursday (Jan 27), the company announced in a bourse filing.

 

Dominus Capital is an investment company incorporated last Oct 7 by husband-wife duo - Koufu' s executive chairman and chief executive Pang Lim and executive director Ng Hoon Tien.

 

UOB, which is acting as the financial advisor to Dominus Capital, said that the offeror has received valid acceptances in respect of 498.3 million offer shares, which translates to 90.12 per cent of the total number of issued shares.

 

The offer was declared unconditional in all respects on Thursday, as the offeror and its concert parties now hold more than half the total number of shares in issue.

 

The date of the close of the offer has been extended to 5.30 pm on Feb 23, from the same time on Feb 9 previously.

 

Dominus Capital has also garnered enough valid acceptances to cross the 90 per cent shareholding threshold for a compulsory acquisition. It now intends to exercise its right of compulsory acquisition to acquire all of Koufu' s shares at its offer price of S$0.77 per share in cash.

 

Dominus Capital will despatch the relevant documents, as well as the prescribed notice under the Companies Act in relation to the exercise of its right of compulsory acquisition, in due course to dissenting shareholders.

 

When the compulsory acquisition is completed, Koufu will be delisted from the Singapore Exchange (SGX).

 

It was previously said that delisting Koufu from the SGX mainboard will give the offeror and the company greater control and management flexibility in deploying available resources, and facilitating strategic initiatives or operational changes.

 

Shareholders will also have a clean cash exit opportunity to realise their investment, Koufu said it added that Koufu' s trading volume has been " generally low" .

 

KOUFU Group' s Koufu: VL6 0% founding shareholders on Wednesday (Dec 29) proposed to privatise the company at S$0.77 per share in cash through a voluntary conditional offer.

 

The offer values the food court operator at S$425.8 million, which is 15 times Koufu&rsquo s pre-pandemic FY2019 earnings and 43 times its FY2020 earnings. 

 

The offeror - Dominus Capital - is an investment company incorporated on Oct 7 by Koufu' s executive chairman and chief executive Pang Lim and executive director Ng Hoon Tien, the group said in a bourse filing.

 

The husband-wife duo has a deemed interest in 77.41 per cent of Koufu' s shares - through Jun Yuan Holdings - which has given an irrevocable undertaking to accept the offer. As at Wednesday, there are about 553 million issued Koufu shares.

 

The S$0.77 offer price represents a premium of 15.8 per cent over Koufu' s last traded price per share of S$0.665 on Dec 28, the last market day before the offer was announced.

 

It also represents a premium of 14.4 per cent, 13.6 per cent, 15.1 per cent and 15.3 per cent respectively over the volume-weighted average price per share for the 1-month, 3-month, 6-month and 12-month periods up to and including Dec 28.

 

Delisting Koufu from the Singapore Exchange' s mainboard will give the offeror and the company greater control and management flexibility in deploying available resources and facilitating any strategic initiatives or operational changes.

 

Shareholders will also have a clean cash exit opportunity to realise their investment, Koufu said, adding that Koufu' s trading volume has been " generally low" . 

 

Azure Capital founder and chief executive officer Terence Wong found the offer price to be at a " decent" premium and said that investors should take the deal as it' s unclear what the impact of Covid-19 would be like on Koufu in the future, which has a greater presence in malls as compared to its competitors. 

 

" Some people will say that we' re coming to the end of the pandemic and things will return to normal but that' s really anybody' s guess as to what' s going to happen," he said. 

 

Justin Tang, head of Asian research at United First Partners, believes the offer is fair when compared to the counter' s initial public offering price of S$0.63, as well as its competitor, Kimly, in terms of valuation. 

 

However, he also pointed out that some investors may have paid more than the offer price for the company' s shares in the past. 

 

" Clearly, the offer has not been made final by Dominus Capital. That tells you that they expect some kind of resistance so it really depends on how it plays out," Tang said, noting that an additional 12.59 per cent of shares need to accept the deal before it fulfils the deal' s minimum acceptance condition.  

 

For the first half ended June 30, 2021, Koufu posted net profit of S$9.9 million, almost quadrupling from S$2.5 million in the year-ago period. Revenue was up 18.8 per cent to S$105.7 million. 

 

For FY2020, the group&rsquo s net profit was 64 per cent lower at S$9.9 million. Revenue meanwhile, was down 19 per cent to S$192.4 million. 

 

Before the Covid-19 pandemic hit in 2020, the group posted an FY2019 net profit of S$27.7 million, while revenue stood at S$237.5 million. 

 

Koufu called for a trading halt on Wednesday morning prior to the announcement. Its shares closed at $0.665 on Tuesday, down 1.5 per cent or S$0.01.

1HFY21 revenue rose 18.8% yoy from S$89.0m to S$105.7m, with the F& B retail business segment increasing by 37.4% yoy, from S$41.2m to S$56.6m and the outlet and mall management segment increasing by 2.7% yoy from S$47.8m to S$49.1m. With an improvement in footfall at food outlets, Koufu managed to increase rental income. PATMI surged 3.9x.

 

New outlets secured, likely at lower rental rates. In 1H, Koufu had opened 1 new food court and 6 F& B kiosks/stalls. We expect these leases were locked in at lower rental rates, lowering expenses until they get renewed. As at 30 Jun 2021, Koufu has net cash of S$68.8m (up from S$65.7m in 31 Dec).

 

Maintain BUY rating at marginally higher fair value of S$0.775 (from S$0.770). Our DCF-derived target price translates into a FY21E/FY22E P/E of 19.5x and 15.8x. We expect further HoH improvements in 2H, with i) new outlet contributions, and ii) as Singapore moves towards an endemic state with more relaxation of limits and measures. Our target price implies a 15.7% upside to the last traded price.