SINGAPORE KITCHEN EQUIPMENT: Homegrown kitchen specialist raises S$3m to ride ASEAN tourism boom

Behind the gourmet spreads of many fine dining establishments in Singapore such as Hotel Rendezvous Straits Cafe (above) is a homegrown kitchen specialist, Singapore Kitchen Equipment, providing integrated kitchen systems solutions. Company photo
ONE OF Singapore’s leading commercial kitchen equipment solutions providers, Singapore Kitchen Equipment, is raising S$3.275 million with its IPO launch last Friday (12 July).

It will list on Catalist on 22 July with a market capitalization of S$30 million based on its IPO issue price of 20 cents.

The company has a dividend policy of a 40% payout on earnings, which translates into a healthy dividend yield of more than 5% based on its IPO issue price.

It owns Q'son, a well-known trade name in the kitchen equipment industry that has been around for more than 15 years, serving many of Singapore’s well-known restaurants such as Jumbo, Ah Yat and Pu Tien, as well as 5-star hotels such as Hilton, The Fullerton and The Ritz-Carlton.
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Husband and wife team: Alan Lee and Sally Chua. Mr Lee oversees the technical and maintenance service division. Ms Chua is responsible for day-to-day management decisions, overall strategic and expansion plans. Photo by Sim KihOther than its two proprietary brands, InnoFlame and Qoolux, it also distributes a wide range of prestigious commercial kitchen equipment brands from Canada, Europe, Japan and USA.

InnoFlame is a range of commercial Chinese cooking stoves (a.k.a. kwali), while Qoolux is a range of industrial refrigeration products.

The company was founded in 1996 by husband and wife team Alan Lee and Sally Chua, together with Frankie Cheng, who is in charge of R&D, manufacture and production of house brands, as well as fabrication.

“We have a systematic approach to earnings growth,” said managing director Sally Chua at a media conference at Pu Tien restaurant on Kitchener Road on Friday.

”In 2006, we started securing projects that required consultancy in design and workflow process in additional to fabrication, installation and commissioning of kitchen systems.

"We also provided maintenance and servicing such as inspection, degreasing and repairs, even for competitors' products.

”In 2007, we began building our own brands by registering trademarks for our house brands, InnoFlame and Qoolux.

”In 2009, we expanded our fabrication facilities by relocating it to Johor.

”We also make it a point to secure distributorships of prestigious overseas brands to augment our own brands,” said Ms Chua.

Executive director Frankie Cheng is the third co-founder. Company photoIts systematic growth strategy, as well as Singapore’s strong tourism numbers, helped boost its net profit by a CAGR of 43.6% over the previous 2 years, to reach S$3.9 million in FY2012.

FY2012 revenue was S$16.6 million, comprising of 64.9% contribution from fabrication and distribution, and another 35.1% from maintenance and servicing.

Net margin was 23.3%.

Foray into booming ASEAN tourism pie

Singapore had enjoyed record growth in tourism over the past 10 years, with a CAGR of 6.6% in visitor arrivals.  However, this is expected to slow down to 3% to 4% over the next 10 years, according to Second Minister for Home Affairs and Trade and Industry S. Iswaran recently.

To sustain its earnings growth, Singapore Kitchen intends to foray into Cambodia and Myanmar, where tourism boom is fueling construction of hotels, which will need kitchen systems.

The company already has established its presence in Malaysia and Vietnam.

Foreign visitor arrivals to Cambodia in 2012 were 3.58 million, up 24% year-on-year.  Cambodia Tourism Minister Thong Khon is expecting 4 million foreign visitors this year, up 12% year-on-year.

Tourist arrivals to Myanmar are expected to rise by about 30% this year, following an increase by 31.4% in 2012 to reach 816,369 tourists, according to the Myanmar Tourism Board.

Its IPO sale proceeds will be used for the acquisition of additional fabrication equipment and machinery, funding its expansion via M&A or JVs, and for general working capital.