PhillipCapital analyst Terence Chua has downgraded Koufu to “neutral” from “accumulate” with a lower target price of 64 cents from 68 cents previously, following the group’s operational update on the impact of Singapore’s move to phase two (heightened alert) measures.  

The new target price is still based on 18.5 times FY2021, which is around the average of its peers, says Chua in a May 24 report.

To Chua, the downgrade comes as the group faces a “speed bump” on its road to recovery.


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“In light of the slower-than-expected recovery in consumption, we lower our revenue estimates for FY2021 and FY2022 by 1.8% and 1.9% respectively. Consequently, profits are reduced by 6.1% and 8.0% from negative operating leverage and the delay in completion of its integrated facility,” he writes.

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In his report, Chua noted that the group should receive some $600,000 in government grants on the back of jobs support scheme (JSS) grants being increased to 50% from 10%.

The added amount, says Chua, would lift the total amount of grants received to $1.6 million in the FY2021.

The group also should see marginal improvements in Macau after the special administrative region (SAR) reopened its borders to foreigners via mainland China, which saw higher footfalls in malls and food courts during the recent Labour Day holidays in May.

“All of Koufu’s food courts at the University of Macau, Nova City and Cotai Sands remained operational, though footfall and revenue were lower than pre-Covid levels. The negative impact has been mitigated partially by rental waivers and rebates from landlords,” he says.

However, the group’s operations in foodcourts, coffee shops and restaurants in Singapore have been hurt by lower footfalls following the Singapore government’s tighter restrictions.


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“While its food outlets remain operational for takeaway and delivery, food courts near offices and in downtown areas, tourist hotspots and tertiary institutions where staff and students have transitioned to home-based learning has been affected the most,” notes Chua.

The construction of the group’s integrated facility operations has also been delayed to the 3QFY2021 from 2QFY2021, due to Covid-19 measures in both Singapore and Malaysia, where certain materials are sourced.

The group had obtained its temporary occupation permit (TOP) in April. It will be occupying 75% of the facility’s total gross floor area (GFA), with the remaining 25% fully tenanted out.

As at 3.09pm, shares in Koufu are trading 0.5 cent higher or 0.8% up at 63.5 cents, or 3.2 times P/B,