Kimly's independent director raises stake while Wilmar's ID pares stake

Danny Lim, an independent director of Kimly Holdings, has increased his stake in the coffeeshop chain operator. On Jan 8, he paid $63,024 for 262,000 shares in the open market, which works out to an average of just over 24 cents each. He now owns a total of 684,600 Kimly shares. He first bought Kimly shares back on March 29, 2019, when he paid $99,060 for 422,000 shares.

More significantly than Lim’s purchases, Kimly has been doing a series of share buybacks last year. The most recent transaction was on Dec 3, when the company bought back 200,000 shares at 24 cents. That brought the total number of shares bought back under the current mandate to 5,994,700 shares.

Lim, a lawyer at Rajah & Tann Singapore, is also an independent director of the following Singapore-listed companies: TEE Land, UG Healthcare Corporation, Stamford Land Corporation and Choo Chiang Holdings. Lim joined Kimly’s board on Feb 15 2017.

Kimly shares closed at 24.5 cents on Jan 13, which implies a historical P/E of 14.08 times, and gives the company a market value of $281.5 million. Since the start of 2019, Kimly’s share price has gained around 7%.

In the 4Q ended Sept 30, 2019, Kimly reported revenue declined 0.9% y-o-y to $52.5 million. However, because of higher administrative costs and overheads, earnings dropped by 6% y-o-y to $5.4 million in the same period. For the full year ended Sept 30, 2019, Kimly’s revenue increased by 3% y-o-y to $208.3 million but earnings dropped by 8.4% y-o-y to $20.1 million.

To soothe its shareholders, Kimly plans to pay a final dividend of 0.84 cent per share, which will be on top of the 0.56 cent per share interim dividend already paid out. The total FY2019 payout of 1.4 cents represents a payout ratio of 80.2% of its earnings of the year, compared to the payout ratio of 50.7% for the preceding FY2018.

To operate its many coffeeshops, Kimly leases space from the owners. However, the company now wants to own more of the properties so that it can reduce risks associated with leasing and tenancy. It also wants to operate more food outlets and food stalls directly instead of leasing them out to other operators.

To this end, on Nov 1, Kimly completed the purchase of its first coffeeshop property at Teck Whye for $14.0 million. It has also signed a non-binding term sheet to acquire interests in a portfolio several coffeeshops and industrial canteen units for an aggregate consideration of $59.0 million.

Wilmar directors pare stakes

Tan Kah Chye, an independent director of Wilmar International, sold 100,000 shares he held in the palm oil giant, leaving him with just 100,000 shares. Tan, a former Citibank executive, who joined Wilmar’s board back in 2006, sold his shares at $4.32 each.

On Nov 12, Wilmar announced that earnings for the 3Q ended Sept 30, 2019, increased by 10.2% y-o-y to US$447.1 million while revenue fell 2.2% y-o-y to US$11.16 billion in the same period.

“Despite the challenging operating environment, we performed well because of our integrated and diversified business model. Our operations in most countries also did well in 3Q2019. Barring unforeseen circumstances, we expect to do reasonably well in 4Q2019,” states Wilmar in the earnings announcement.

Tan isn’t the only Wilmar director who sold in recent months. On Dec 11, executive director Teo La Mei sold 20,000 shares for $84,000. The following day, she sold anoher 10,000 shares for $42,500. She still holds 702,000 shares.

Since the start of 2019, Wilmar shares have gained 38% to close at $4.35 on Jan 13, which values the company at 20.27 times historical earnings. Besides an anticipated recovery in palm oil prices, Wilmar is expected to spinoff its China businesses for its separate listing. From the proceeds of this IPO, Wilmar’s chairman and CEO Kuok Khoon Hong had earlier promised to reward shareholders with a special dividend. E