It seems that reopening the economy does have its downfalls. In Singapore’s cases, Covid-19 cases within the community increased. Although about 80% of the population have been vaccinated and positive cases have been advised to recover at home, the alarming increase in cases have pushed the government to tighten measures once again.

This time, with effect from Sept 27 to Oct 24, the government has reverted to two-pax dine-in for all F&B outlets, down from five pax previously for outlets that are not hawker centres or coffee shops.

Meanwhile, work-from-home (WFH) and home-based learning (HBL) has been reinstated as default.


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The tight measures were implemented to prevent further infections and buy time for Singapore to scale up its home recovery and home care services.

To that end, CGS-CIMB is keeping “neutral” on the local F&B industry, as it believes that mass-market F&B outlets located in the heartlands could see footfall bolstered by more employees working from home, and students engaged in HBL.

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Lead analyst Kenneth Tan has “add” calls on coffeeshop operator Kimly and food court operator Koufu with target price of 46 cents and 80 cents respectively.

Kimly is the analyst’s top pick and he believes that the stock could benefit slightly, as it has the highest heartlands exposure via its diverse network of coffee shops (about 78% of outlets are in the heartlands).

Meanwhile, Tan thinks that the tightened measures could be slightly negative for Koufu, due to food courts only allowing two-pax per group and lower footfall for outlets located in malls, tourist hotspots, and schools.

“While Koufu has a decent presence in the heartlands via its food courts and coffee shops, tighter distancing measures would impact its outlets located at tourist hotspots, schools, and malls,” says Tan.

On the other hand, Tan believes that Jumbo should be most impacted given its focus on the mass premium market and having the bulk of its outlets located in non-heartland areas.

Overall, the Singapore F&B service index peaked in March this year as footfall recovered amid Phase 3 measures where up to eight patrons per group were allowed to dine-in. Since then, the index has fallen steadily in line with tightening distancing measures in Singapore.


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As of latest figures in Jul 21, restaurants are still suffering (-22% y-o-y), while cafes, food courts and other eating places were relatively resilient with 7% y-o-y growth, albeit still lower compared to pre-Covid levels.

“We also note that the demand for online food delivery has been structurally growing, which bodes well for companies with established online presence,” adds Tan.

The outlook for the F&B sector, according to Tan, is still uncertain. “2021 has been a tough year for the F&B industry in Singapore… Despite Singapore’s transition to living with the virus, it appears that tightening of distancing measures may still be required in future to control rising infection rates,” he says.

As at 4.15pm, shares in Kimly and Koufu are trading at 38 cents and 64 cents respectively.

Photo: The Edge Singapore/ Albert Chua