Coffee chain Kimly expected to overtake peers

Singapore’s downstream F&B services sector is poised for a promising year, with expectations of heightened consumer demand and a stronger economic landscape, according to insights from RHB.

Equity analyst Alfie Yeo from RHB anticipates a leap in Singapore’s GDP growth to 3% this year, a significant rise from the previous year’s 1.5%.

Yeo attributes this growth to an increasingly favourable external environment, suggesting a positive impact on consumption and income.

“This should translate into more positive consumption and income from the workforce eventually, as domestic industries recover and benefit from a more robust global demand,” Yeo stated.

The sector, however, has been rated “neutral” by RHB, noting that the F&B Services Index has surpassed its pre-pandemic levels. This surge is largely driven by the success of cafes, food courts, and other mass-market eateries that offer affordable dining options.

In the coffee chain segment, Kimly stands out, projected to excel among its peers due to its ongoing outlet expansion and a promising cafe market outlook.

Yeo expressed a preference for the resilience of coffee shops, especially in light of the recent distribution of S$250 Community Development Council (CDC) vouchers.

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“[We] prefer more resilient coffee shops over quick-service restaurant format… We expect consumption for coffee shops to remain elevated this year, especially with the recent issuance of $250 Community Development Council (CDC) vouchers,” Yeo explained.

On the other hand, Japan Foods might encounter hurdles in the coming year. RHB maintains a “cautious FY2025 profit outlook” for the company, foreseeing challenges due to high operational costs and limited manpower resources.

Consequently, while Kimly has earned a “buy” rating from RHB, Japan Foods has been given a more conservative “neutral” rating.

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