CGS-CIMB has initiated coverage on Kimly with " add" and set a target price of S$0.46, noting that Singapore' s continued shift towards a hybrid work-from-home model should support footfall at Kimly' s heartland outlets and boost its food delivery services.

 

In a report on Friday, the research team said the coffee shop and food court operator, which is its top pick among listed food and beverage (F& B) companies, enjoys resilient demand from mass-market consumers even in times of economic uncertainty, as the group' s coffee shops are predominantly located in the heartlands.

 

More individuals working from home could mean more patrons at heartland coffee shops, resulting in higher same-store sales for Kimly' s food outlets, CGS-CIMB said.

 

Kimly is also well-established on the food delivery apps, hence strong demand for food delivery services amid shifting consumer preferences and continued work-from-home arrangements should further spur growth, the research team added.

 

Additionally, Kimly' s expected acquisition of F& B company Tenderfresh will likely contribute to the group' s net profit in FY2022, CGS-CIMB said. The deal should also allow the group to tap the halal F& B market in Singapore, enhance its presence in the quick-service restaurant segment and gain new revenue sources such as business-to-business food production, it added.

 

CGS-CIMB expects the acquisition to bring Kimly' s net cash to about S$20 million by FY2021, noting that the group' s strong balance sheet should continue to allow it to grow both organically via outlet expansion and inorganically via acquisitions. It added that Kimly has a cheaper valuation and stronger dividend yield compared with its peers.