Shares of Kimly, the first coffee- shop operator to list on the Singapore Exchange (SGX), made a piping hot trading debut yesterday.
The counter opened at 56 cents, 124 per cent above its initial public offering (IPO) price of 25 cents, before closing at 44 cents, up 76 per cent. About 108.5 million shares changed hands, making it the most actively traded counter yesterday.
"The offer price was very low, at about 12 times price earnings (a measure of share price relative to profits), and the company's cash position is very strong. It is a very defensive business," said an analyst.
Kimly aims to pay at least 50 per cent of its net profit as dividends.
In the IPO for a listing on the Catalist board, 3.8 million new shares were offered to the public and 170 million shares were sold to institutional investors, among others.
The IPO was subscribed about 8.3 times, underscoring strong interest. The firm has an estimated market value of $288.7 million.
But most successful retail investors were allotted only 1,000 or 2,000 shares, so their windfall on paper based on the closing price would be about enough to treat a group of friends to a zi char meal and coffee at a coffee shop.
The SGX this month proposed giving retail investors more opportunity to get a slice of IPOs. Under the proposal, new firms listing on the SGX mainboard would have to set aside at least 5 per cent or $50 million of the IPO, whichever is lower, for retail investors. The new rule is expected to kick in on May 2.
Corporate lawyer Robson Lee said the balloting for Kimly shows there is a need to extend the requirement to Catalist offerings. "However, the rules could permit the Catalist issuer to seek dispensation from this requirement from the SGX due to market conditions or other cogent reasons," he said.
Kimly executive director Vincent Chia said: "We will be focusing on using technology to increase our operational efficiencies as well as to cater to the increasing number of tech-savvy customers, such as providing an online platform to order our food."
Kimly raised $43.5 million in net proceeds, to be used for acquisitions, joint ventures and business expansion, including establishing new food outlets. They will also be used to refurbish and renovate existing outlets, and upgrade its headquarters and central kitchen. It has nearly 500 stalls in 64 outlets - 56 coffee shops, five foodcourts and three industrial canteens.