• Food Innovators Holdings (FIH) is a restaurant operator specialising in traditional Japanese and Japanese-inspired European cuisines. FIH has restaurants across Japan, Singapore and Malaysia, including popular names such as unagi restaurant Man Man and tempura rice bowl outlet Tendon Kohaku. 
   
• FIH operates two business segments – 1) Restaurant Leasing and Subleasing Business (RLSB) which focuses on matching properties and tenants in the restaurant business in Japan, and 2) Food Retail Business (FRB) establishes, operates, and manages restaurants along with the provision of food & beverage consulting.
   
• The Group does not have a fixed dividend policy, however, intends to distribute a dividend payout ratio of 20% of the Group’s consolidated net profit after tax for FY2025 and FY2026, either as an annual dividend or an interim dividend.
   

Food Innovators Holdings (FIH) is a restaurant operator focusing on traditional Japanese and Japanese-inspired European cuisine. FIH has a geographical footprint across Japan, Singapore and Malaysia – with 12 restaurants and 214 subleased properties in Japan, 10 restaurants in Singapore, and 4 restaurants, 1 bakery café and 1 central kitchen facility in Malaysia. Some of its brands in Singapore include tempura rice bowl restaurant Tendon Kohaku, unagi outlet Man Man and skewers bar Yatagarasu.

At an initial market capitalisation of S$24.9 million, FIH has two business segments:

• Restaurant Leasing and Subleasing Business (44.8% of FY24 revenue) – Lease restaurant premises from landlords and sublease them to restaurant tenants. Focus is on operations in the Tokyo Metropolitan Area. Our business model addresses market gaps in Japan where we act as a facilitator between landlords and tenants as landlords who operate rental businesses typically hesitate to lease premises to small restaurant owners due to credit risk concerns.
• Food Retail Business (55.2% of FY24 revenue) – Establish, operate and manage restaurants along with provision of food & beverage consulting. Within Japan, we operate and manage our directly-owned restaurants, outside of Japan we engage in a collaboration model involving joint ventures with local restaurant operators.

Restaurant Industry Outlook & Prospects (from the Offer Document)

• Industry trends in Japan:
  • The Real Estate Retail Sales segment has grown from JPY 146 trillion in 2020 to JPY 163 trillion in 2023, representing a 11.6% growth. There has been positive long-term growth as restaurants benefit from macroeconomic tailwinds.
  • As foreign tourism post COVID-19 has led to sharp increases in food & beverage spending, restaurant sales have accelerated as a result. The number of visitors increased by 6x from 4.1 million in 2020 to 25.1 million in 2023, with food & beverage spending by domestic visitors up 96% and foreign visitors up 38% from 2019 to 2023.
• Industry trends in Singapore & Malaysia:
  • The rise in tourism and an increase in affluence has served as tailwinds for the food & beverage sector.
  • Citing a growing affinity for Japanese anime culture and the popularity of Japanese cuisine, the demand for Japanese food is expected to continue to grow.

Highlights from the Offer Document

Competitive Strengths

• Ability to reap synergistic benefits of operating two complementary businesses to provide a one-stop solution for customers’ restaurant management needs and introduce innovative brand concepts.
• Ability to expand Japanese brands to overseas markets, and continuously innovate and introduce fresh dining experiences and interesting food concepts to meet evolving customer preferences.
• Provide comprehensive end-to-end consulting services ranging from leasing to support services for new ventures.
• Restaurants and subleased properties are optimally located in high-profile areas which are accessible to and highly frequented by a diverse crowd.

Business Strategies & Future Plans

• Restaurant Leasing and Subleasing Business (RLSB)
  • Expand in Japan, focusing on the Tokyo Metropolitan Area and other major cities in Japan.
• Food Retail Business (FRB)
• Strategic overseas expansion through collaborations with local Japanese restaurant operators.
• Introduce new Japanese food brands and concepts in Singapore and Malaysia to enhance offerings and capture wider group of customer segments.
• Enhance market presence of “Moomin” brand in Japan, acquire operating rights of popular anime-themed restaurants and expand food retail business in Japan.

Key Risk Factors

(Refer to page 40 of the Offer Document for a complete list of risk factors)

• The Group may not be able to successfully replicate its business and growth strategies and/or future plans or replicate its business model in other geographic markets.
• The Group may be affected by unfavourable exchange rate fluctuations as a considerable portion of its revenues are denominated in currencies aside from its reporting currency of SGD.
• The Group may be materially and adversely affected by a shortage of ingredients and are susceptible to the increase in the cost of ingredients.
• Dependent on the strength of its and its business partners’ reputation, brands and intellectual property.
   

Financials

• The Group's revenue has increased year-over-year from FY2022 to FY2024, rising from S$37.8 million to S$43.8 million. This growth is attributed to the expansion in the FRB segment, supported by consistent income from the stable RLSB segment.
• For FY2024, the Group reported a Profit before Tax of S$2.3 million, compared to a loss of S$3.2 million in FY2023. This improvement was primarily due to a rise in gross profit by S$2.5 million and an increase of S$1.8 million in other income resulting from subsidiary disposal. Additionally, there was a decrease in administrative and distributive expenses as well as other operating costs amounting to S$1.6 million, although this was partly offset by an increase in finance costs and share of losses from associates totalling S$0.3 million.

• The Group’s gross margins have also improved, with the Blended Gross Margin increasing from 15.2% in FY2022 to 17.9% in FY2024. Japan remains the largest revenue generator, contributing 72.1% of the Group’s revenues in FY2024, followed by Singapore with 14.7%, Malaysia with 12.6%, and Taiwan with 0.6% before Food Innovators Taiwan was sold on 26 February 2024.
• Based on the invitation price of 22.0 cents, and the audited earnings per share of the Group for FY2024 post-invitation and assuming the service agreements had been in place was at 1.16 cents, the price-to-earnings ratio is 19.0 times.
• The Group does not have a fixed dividend policy, however, its Directors intend to recommend and distribute a dividend payout ratio of 20% of the Group’s consolidated net profit after tax for FY2025 and FY2026, either as an annual dividend or an interim dividend.

Restaurants-related Plays on the SGX

After the listing of FIH, SGX now lists 17 Restaurants-related plays with a total market capitalisation of approximately S$1.59 billion. Here are the top 3 by market cap:

Source: SGX, Refinitiv, Bloomberg (Data as of 15 October 2024). List excludes RE&S Holdings which will be delisting 17 October.
 

• Helens International operates bar chain networks, selling its own craft beer, fruit beer, milk beer, and others.
• Kimly Limited operates and manages coffee shops and food courts. The company offers prepared foods and drinks for on-premises consumption, and only operates in Singapore.
• Jumbo Group is a seafood restaurant group offering multiple dining concepts catering to all types of consumers. The company offers restaurants in Singapore, China and Japan.
• ABR Holdings manufactures ice cream and operates Swensen’s ice cream parlors and restaurants and other specialty restaurants. The company also manufactures and sells confectionary and pastry products, operates pubs, discotheques, and restaurants.
• Japan Food Holdings specializes in quality and authentic Japanese cuisine, operating a chain of over 50 restaurants under various franchises and brands such as Tokyo Shokudo, Yakiniku Shokudo, and Fruit Paradise.

Additional Information from the Introductory Document

Overview of Food Innovators Holdings

Food Innovators Holdings was formerly a subsidiary of Foodys in Japan, before being acquired in stages by its now Executive Chairman Furukawa Kazuteru. The Group has seen significant expansion since April 2011, transitioning from 140 subleased properties encompassing a total floor area of 17.2 million square meters to managing 214 subleased properties covering 23.0 million square meters as of this offering. The Group first entered the Food Retail Business in October 2011, and today manages 12 restaurant outlets in Japan, 10 in Singapore, and 4 in Malaysia for a total of 26 restaurant outlets, excluding an additional bakery café and central kitchen facility.
 

Shareholding Information

Post-invitation and assuming all outstanding options have been exercised:

• 41.1% held by Executive Chairman Furukawa Kazeteru
• 7.6% held by CEO Kubota Yasuaki
• 5.8 % held by Executive Officers
• 12.6% held by Pre-IPO Investors
• 4.5% held by Other Pre-IPO Option Holders
• 0.4% held by PrimePartners Corporate Finance
• 28.0% held by Public Shareholders
   

IPO Details

• Issue Price at S$0.22
• IPO Market Capitalisation S$24.9 million
• Total of 14.0 million invitation shares comprising:
  • Public offer: 1.0 million shares
  • Placement: 13.0 million shares
• Use of IPO net proceeds of S$1.1 million:
  • S$0.5 million – Expansion of Food Retail Business outside Japan
  • S$0.5 million – Acquisition of rights, introduction of new Japanese food brands to Singapore and Malaysia
  • S$0.1 million – General working capital purposes

Did you know?

Food Innovators Holdings opened its very first restaurant at Tanjong Pagar, a ramen shop under the “Menya Sanji” brand, in December 2012. As of this offer document, FIH has 10 restaurant outlets in operation across Singapore. These include Japanese cuisine brands such as “Niku Katsumata:, “Yatagarasu”, “Kadohachi”, and “Mikoto”. The Group has also assisted with the expansion of operations of other notable Japanese brands such as “Tendon Kohaku” and “Man Man” in Singapore.

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