Kimly reported robust FY20 results as support from the JSS helped to boost earnings. FY20 net profit grew 25.8% yoy to S$25.2m, forming 105% of our full-year forecasts. Gross profit soared 38.9% yoy largely due to government grants and rebates.
Kimly still has:
a) a high net cash balance of S$43.9m
b) a higher dividend yield vs peers and
c) strong future earnings growth from newly-acquired/refurbished coffee shops.
Maintain BUY with PE-based target price of S$0.36.
COFFEE shop operator Kimly is a " buy" given the growing revenue stream from food delivery and as acquisitions are set to boost its profitability, said UOB Kay Hian (UOBKH) and RHB in separate reports.
The company' s lower price point and heartland presence will also appeal to customers especially as people work from home, and Kimly is likely to continue to reward shareholders with attractive dividends.
UOBKH has initiated coverage on Catalist-listed Kimly with a " buy" call and a target price of S$0.36.
Meanwhile, RHB maintained its " buy" rating and upped its target price to S$0.32 from S$0.29 previously.
At 30.5 cents, the p/e is only 13.9X. Based on its growth potentials and given the company's aggressive recent acquisitions, a fair p/e should be around 18.0X which translates to a price of around 40.0 cents. A p/e of 18X is still low compared w the p/e of most of the listed food companies.
RHB upgrades Singapore consumer stocks to ' overweight'
IN view of consumption trends in a post-Covid-19 world, RHB has upgraded the consumer sector to " overweight" , from " neutral" .
Among Singapore-listed stocks, the research team prefers staple-food plays with exposure to domestic recovery, while beer and liquor giant Thai Beverage Public Co (ThaiBev) is its top pick for the sector in 2021.
Meanwhile, Kimly' s net profit is set to see a further boost from new joint ventures and acquisitions, said another RHB analyst, Jarick Seet. He maintained his " buy" call and upped the target price to S$0.34.
Kimly' s business model has shown resilience, with revenue rising 1.2 per cent and net profit growing by 25.8 per cent for its fiscal year ended Sept 30, 2020, said Mr Seet. He expects Kimly' s dividends to remain attractive at 4.2 per cent for FY21.