The lead independent director of restaurant operator Japan Foods, Ms Tan Cher Ting, is currently out on bail after being interviewed by the Commercial Affairs Department (CAD) on Feb 11.

 

The interview is in connection with an investigation into a possible offence under the Securities and Futures Act (SFA). The investigation relates specifically to Section 219 of the Act, which concerns the conduct of persons in possession of inside information.

 

In a bourse filing on the evening of Feb 12, mainboard-listed Japan Foods said Ms Tan &ndash who also chairs its board&rsquo s nominating committee &ndash had informed the company that the investigation is a personal matter and does not involve the shares or business activities of Japan Foods.

 

Nevertheless, in view of the ongoing investigation, the board has accepted the nominating committee&rsquo s recommendation for Ms Tan to relinquish her roles as lead independent director and chairwoman of the nominating committee. She will remain a member of the committee.

 

It added that, to the best of the nominating committee&rsquo s and the board&rsquo s knowledge, Ms Tan has not been charged with any offence. Since her appointment to the board in 2023, she has conducted herself &ldquo in an independent and professional manner&rdquo .

 

&ldquo Tan has confirmed that she will provide updates to the board as and when there are any material developments in relation to the investigation,&rdquo the board said.

 

The company added that it will continue to monitor developments and reassess Ms Tan&rsquo s suitability for her current appointment should there be any material changes.

 

In view of Ms Tan relinquishing her role, the chairman of the remuneration committee, Mr Benny Lim, will take over as chairman of the nominating committee. Meanwhile, Ms Tan will replace Mr Lim as chairwoman of the remuneration committee.

 

Mr Jason Lee, the current chairman of the audit and risk committee, will be appointed lead independent director.

 

The company&rsquo s key restaurant brands include Ajisen Ramen, Menya Musashi, Konjiki Hototogisu, Yakiniku Shokudo, Milan Shokudo and Tokyo Shokudo.

On Jul 24, Japan Foods Holding non-executive vice-chairman Eugene Wong acquired 60,000 shares at S$0.19 apiece. This increased his total interest from 5.63 per cent to 5.66 per cent. His preceding acquisition was on Jun 24, with 38,000 shares acquired at S$0.26 per share. 

 

Japan Foods Holding is one of the leading Japanese restaurant chains in Singapore. Its franchised brands include Ajisen Ramen, Kageyama and Konjiki Hototogisu. The group currently sees Singapore&rsquo s food and beverage sector shifting from expansion to profit recovery, thus prompting tighter monitoring of outlet performance and a focus on innovation and consumer needs. It has also been actively identifying and extending brands that enjoy greater customer loyalty and have stronger identity than others, while pruning any underperforming brand that may be draining resources.

 

In addition, Wong acquired 9,900 shares in Jason Marine Group at S$0.15 apiece on Jul 24, where he also serves as deputy non-executive chairman. 

 

Japan Foods Holding, citing lower revenue and higher costs, has reported a loss of $7.9 million for its FY2025, significantly worse versus FY2024' s red ink of $0.5 million.

 

Revenue for the 12 months ended March was down 3.2% y-o-y to $83.6 million, due partly to a drop in consumary discretionaly spending and intense market competition from new brands.

 

The company attributes the stronger Singdollar as a reason too, as tourists are finding this a more expensive place to spend.

 

Japan Foods says that its selling and distribution costs increased by 5.5% y-o-y to $70.9 million, due to costlier manpower, utility and rent.

 

The company incurred " other operating expenses" of $2.3 million, up 82.9% y-o-y, no thanks to write-offs of renovation costs upon the rebranding and closure of outlets.

 

The company booked impairment losses of $3.6 million, up 93.4% y-o-y, due to the impairment loss on the loan provided to a joint venture company as well as impairment losses for certain non-performing stores under the group and an impairment loss of a franchise right.

 

As at March 31, the company remains debt-free, with cash and equivalents of $7.9 million, which was a drop from $11.5 million as at March 31, 2024.

 

As at March 31, Japan Foods directly operated 21 brands across 78 restaurants, down from 84 outlets as at Sept 30, 2024.

 

Takahashi Kenichi, executive chairman and CEO of Japan Foods calls the FY2025 results a reflection of the difficult operating environment.

 

" Moving forward, we will continue to execute our turnaround strategy, which includes rationalising our brand portfolio to focus on our more established and proven brands, and not renewing or pre-terminating leases of non-performing outlets," he adds.

 

Meanwhile, the company expects conditions to be further compounded by ongoing industry challenges, including manpower shortages, rising costs and changing consumer preferences.

 

" The strong Singapore dollar will also continue to encourage more overseas travel and spend, particularly to Japan," the company says.

This is based on a preliminary review of the unaudited management accounts of the group

 

[SINGAPORE] Japan Foods : 5OI -3.7% announced on Monday (May 5) that it expects to report a &ldquo substantial net loss&rdquo for FY2025 ended Mar 31, based on a preliminary review of the group&rsquo s unaudited management accounts.

 

The food and beverage group &ndash whose brands include Ajisen Ramen and New ManLee Bak Kut Teh &ndash blamed the poor performance on:

 

weak sales caused by market saturation and challenging macroeconomic conditions

 

higher selling and distribution expenses due to increased manpower cost, utilities expenses, rental and depreciation charges and

 

impairment loss relating to non-performing outlets and write-off of fixed assets relating to the closure of certain outlets.

 

Further details of its financial performance will be disclosed when it announces its unaudited results.

 

On Feb 6, Japan Foods reported that higher operating costs pushed it into a net loss of S$2.9 million for the nine months ended Dec 31, 2024, compared with a net profit of S$668,000 previously.

 

Revenue fell 0.6 per cent to S$64.9 million due to weak sales in November and December 2024.

 

The group also recorded an allowance of S$680,000 for impairment loss on a loan to a joint venture (JV) company, Dining Collective. It has decided to wind down the JV after reviewing the latter&rsquo s performance amid challenging market conditions.

 

In the May 5 statement, the group advised its shareholders and investors to exercise caution when dealing in the shares of the company.

The group&rsquo s revenue falls 0.6% to S$64.9 million due to weak sales in November and December

JAPAN Foods sank into the red with a net loss of S$2.9 million for the nine months ended Dec 31, 2024, compared with a net profit of S$668,000 in the corresponding year-ago period.

 

This was mainly due to higher operating expenses, attributed to an increased number of operating outlets in the 9M period, the group said on Thursday (Feb 6).

 

Japan Food&rsquo s revenue fell 0.6 per cent to S$64.9 million, from S$65.3 million in the same period the year before, due to weak sales in November and December.

 

Selling and distribution expenses rose 8.3 per cent to S$53.9 million, from S$49.8 million, due to higher manpower costs, utilities expenses and depreciation charges of right-of-use assets, in line with the increased number of operating outlets.

 

Other operating expenses increased 90 per cent to S$1.5 million in the same period, from S$770,000, mainly due to an increase in the write-off of plant and equipment attributable to the rebranding and closure of restaurants, as well as the relocation of a restaurant in VivoCity mall.

 

Lease interest expenses rose 6.7 per cent to S$1.24 million, from S$1.16 million, due to a higher number of operating outlets in the period.

 

Japan Foods also recorded an allowance for impairment loss on a loan to a joint venture (JV) company, Dining Collective, amounting to S$680,000. This is after its assessment, inter alia, of the performance of the outlets under the JV and challenging market conditions, which led to the decision to wind down the business of the JV.

 

The group said the local food and beverage industry has been affected by the strong Singapore dollar, which encouraged more Singaporeans to travel and spend overseas.

 

It expects the business environment to remain tough, with conditions further compounded by ongoing industry challenges including manpower shortages, rising costs of operations due to inflation, and changing consumer preferences.

 

To overcome these difficulties, the group plans to rationalise its brand portfolio by focusing on its &ldquo more established and proven brands&rdquo , it said.

 

It has already decreased the number of operating outlets to 82, from 84, as at Dec 31, 2024.

 

The group will continue to streamline its operations, manage costs and improve outlet perfromance by stepping up its marketing and promotional efforts, it said.

This was mainly due to weak sales in November and December 2024, despite a higher number of operating outlets

 

JAPAN Foods expects to report a loss for its nine months ended Dec 31, 2024, mainly due to lower revenue and higher selling and distribution expenses.

 

In a bourse filing on Friday (Jan 24), the company said revenue for the period was lower than the previous corresponding period in 2023, mainly due to weak sales in November and December 2024, despite a higher number of operating outlets.

 

Meanwhile, in line with the higher number of operating outlets, selling and distribution expenses were higher mainly due to increases in manpower costs, utilities expenses and depreciation charges.

 

The company noted that this is only a preliminary assessment further details of its financial performance will be disclosed when it announces its business and financial update, it said.

The group says net loss comes from higher year-on-year overall operating expenses

 

JAPAN Foods logged a S$1.6 million net loss for its first half ended Sep 30, from a profit of S$81,000 for the same period in the year prior. This came despite its revenue rising 1.1 per cent on the year to S$43.4 million for H1 FY2025, from S$43 million previously. 

 

The group noted that its higher revenue came from strong performance in its halal segment, but this was partially offset by weaker revenue contributions from its non-halal segment. Its loss per share stood at S$0.0094, compared with earnings per share of S$0.0005 in the previous year. 

 

On Thursday (Nov 14), the group said that its net loss was due to higher overall operating expenses, which rose 10 per cent on the year and affected its bottom line. 

 

This was largely driven by selling and distribution expenses, which widened 9.8 per cent to S$35.9 million from S$32.7 million, due to higher depreciation charges of plant and equipment and right-of-use assets, as well as manpower and utilities costs. 

 

Its other operating expenses rose to S$1 million from S$569,000, and its interest on lease liabilities climbed to S$844,000 from S$741,000. 

 

The group did not propose any interim dividend per share for the current financial period in view of its net losses. 

 

The company said that it expects the next 12 months to remain challenging due to economic headwinds the food and beverage industry has also been beset by conditions such as intense industry competition, persistent manpower shortages, the high cost of raw materials and operation costs from inflationary pressures. 

 

Japan Foods executive chair and chief executive Takahashi Kenichi said: &ldquo We will focus on improving per-store performance and profit recovery. We will also intensify efforts to manage our costs through the streamlining of our restaurant network and our operations for greater efficiency.&rdquo  

Its full-year loss stands at S$495,000 as enlarged operations swell expenses

 

JAPAN Foods has sunk into the red with a net loss of S$576,000 for its second half-year ended March, after having chalked up a net profit of S$1.8 million in the previous half-year.

 

The loss came mainly from selling and distribution expenses being 14.7 per cent higher, at S$34.5 million, despite a 7 per cent rise in revenue to S$43.4 million for the half year, based on the group&rsquo s financials released on Friday (May 24).

 

Loss per share for the period stood at S$0.0033, from an earnings per share of S$0.0103 the previous year.

 

A final dividend of S$0.002 per share was proposed for the half-year for shareholders&rsquo approval at its upcoming annual general meeting. Together with an interim dividend of S$0.003 per share, it will take the total dividend for FY2024 to S$0.005 per share. The date payable will be announced later.

 

Additionally, the board is revising the company&rsquo s dividend policy to distribute dividends of at least half the group&rsquo s audited consolidated net profit attributable to shareholders for the current financial year ending Mar 31, 2025, and after. This is, however, subject to the group&rsquo s business requirements and other considerations, and barring unforeseen circumstances.

 

For FY2024, the group&rsquo s net loss stood at S$495,000, compared with a net profit of S$4.1 million in FY2023. This was despite a 10 per cent rise in its top line to S$86.4 million, driven by the expansion of its restaurant network to 79 restaurants from 65 in FY2023.

 

The net loss was mainly due to a 17.7 per cent year-on-year increase in selling and distribution expenses due to higher manpower costs, utilities expenses and depreciation charges of plant and equipment and right-of-use assets, said the group.

 

In addition, the group also incurred a write-off of renovation costs from the rebranding of outlets, impairment loss relating to certain non-performing stores, and impairment loss on a loan provided to a joint-venture company upon the cessation of the &ldquo Siam Smith&rdquo brand restaurant in Tokyo.

 

Japan Foods noted that the &ldquo significant&rdquo expansion in its restaurant network and brand portfolio will contribute to the group&rsquo s future revenue growth, and that the increase in the number of halal-concept restaurants would solidify its position in this segment of the market.

 

&ldquo The group expects the next 12 months to remain challenging due to prevailing market conditions. These include intense industry competition, the persistent manpower crunch and high raw material and operational costs arising from inflationary pressures,&rdquo it said.

 

Takahashi Kenichi, executive chairman and chief executive officer of Japan Foods, said the company went into an aggressive expansion of its network partly because opportunities to secure good locations came up.

 

&ldquo Looking ahead, our network expansion is likely to be at a more measured pace as we shift our focus to improving profitability by driving the performance of individual restaurants, while exercising financial prudence to manage our expenses,&rdquo he said.

 

Japan Foods Holding has recorded a net profit of $668,000 in its 3QFY2024 ended December, down 79.4% from the $3.2 million recorded in its 3QFY2023.

 

This is despite higher revenue, which increased 11.8% y-o-y to $65.3 million due to expanded Halal offerings and a higher number of operating restaurants. 

 

Gross profit increased by 11.8% to S$55.2 million in 3Q2024, in line with the increase in revenue. Group profit margin remained the same at 84.6%.

 

Cost of sales, on the other hand, grew by 11.5% y-o-y to $10 million.

 

The company&rsquo s selling and distribution expenses administrative expenses other operating expenses and lease interest expenses for the period grew by 19.4%, 5.4%, 68.9%, and 62.5% y-o-y respectively. 

 

Japan Foods expects the next 12 months to remain challenging due to economic headwinds. The hike in GST to 9% with effect from January may also lead to short-term cautionary response from consumers. 

 

To mitigate these challenges, the company will continue to focus its efforts on controlling raw material costs and on improving operational efficiency via streamlining of work processes and the adoption of technology. 

 

Yet another Singapore-listed company has announced it has been hit by a cyberattack.

 

Japan Foods Holdings, in an announcement on Jan 22, says it was the subject of a ransomware incident where an unknown party gained unauthorized access to its servers and encrypted information within.

 

The incident impacted the data stored on the servers, and the company is in the process of restoring the data.

 

The incident was detected on Jan 19 when the company' s employees reported issues with a software application.

 

The company hired consultants and made a police report.

 

Just on Jan 11, another Singapore-listed F& B player RE& S reported it was hit by ransomware attacks.

 

Offshore and marine firm ES Group (Holdings) reported on Jan 5 it was hit similarly hit. 

 

IPS Securex on Jan 2 announced it was hit.

RHB Bank Singapore' s Shekhar Jaiswal has downgraded Japan Foods Holdings to " neutral" from " buy" after it reported lower-than-expected earnings for 1HFY2024 on higher costs.

 

Along with the downgrade, Jaiswal, in his Dec 8 note, cut his target price for the company, led by chairman and CEO Takahashi Kenichi (picture), to 30 cents from 45 cents.

 

Nonetheless, the company, which is actively expanding its number of outlets, might just " yield an upside surprise."

 

In his Dec 8   note, Jaiswal points out that the company' s lower earnings for the half year ended Sept 30, no thanks to the delayed impact of inflation that started earlier in the year.

 

For its half year ended Sept, Japan Foods generated a 13% y-o-y increase in revenue to $43 million. However, higher-than-expected costs sent earnings down 60% y-o-y to $872,000, missing Jaiswal' s projection of $3 million.

 

In line with the lower earnings, the company cut its interim dividend to 0.3 cents from 1 cent paid this time last year.

 

Jaiswal expects cost pressures to persist. Besides the delayed impact of the inflation, the company is incurring costs with its active expansion as well, from 72 outlets at the end of 1HFY2024 to between 77 - 78 by the end of the current FY.

 

" This, in addition to the manpower constraints, will keep operating costs high in the near term. The addition of new stores would also lead to higher-than-normal capex and elevated depreciation expenses," warns Jaiswal.

 

Nonetheless, there are some " bright spots" . For example, Japan Foods has a thriving business selling halal food, with the number of outlets catering to this segment doubling in 1HFY2024.

Two of the halal concept outlets were the ones generating the most revenue growth in 1HFY2024.

 

Given the promising results, Japan Foods plans to continue focusing its expansion plans on halal-concept restaurants, to account for more than half of its total revenue by the end of the current FY2024.

 

While Jaiswal expects the expansion of its halal restaurants, moderation in inflation, and improvement in Singapore&rsquo s economic growth to boost earnings, confirmation of this trend will only be visible in FY2025 ending June 2025. " Therefore, we prefer to reassess our views post FY2024 results," he says.

 

Taking a conservative stance, he cut his FY2024 and FY2025 profit estimates by 63% and 38% respectively.

JAPAN Foods posted a net profit of S$81,000 for the first half ended September, representing a 96.5 per cent decline from S$2.3 million in the previous year.

 

Earnings per share fell 96.3 per cent to S$0.0005, from S$0.0134 a year earlier.

 

On Friday (Nov 10), the food and beverage group said this was mainly due to a net increase in operating expenses from its expanded restaurant network, coupled with the provision of a one-off S$791,000 impairment loss.

 

The impairment loss was related to a loan made to its joint-venture company with Minor Food Group Singapore, to operate a Siam Smith brand restaurant in Tokyo. This Tokyo restaurant ceases operations this month, felled by &ldquo adverse operating conditions&rdquo in the market, said Japan Foods.

 

Revenue for the half year grew 13.2 per cent to S$43 million from S$38 million a year prior, boosted mainly by higher contributions from the group&rsquo s halal segment.

 

In line with the topline increase, gross profit climbed 12.8 per cent to S$36.3 million from S$32.2 million. Gross profit margin, however, fell 0.3 percentage point to 84.4 per cent over the half-year period due to higher materials costs.

 

Selling and distribution expenses grew 21 per cent on the year to S$32.7 million from S$27 million as a result of higher manpower costs, utilities expenses, as well as depreciation charges of plant and equipment and right-of-use assets.

 

Administrative expenses rose 10.6 per cent to S$2 million from S$1.8 million, as a result of higher manpower costs with the group&rsquo s expanded business operations.

 

Takahashi Kenichi, executive chairman and chief executive of Japan Foods, said: &ldquo To lay the groundwork for future growth, Japan Foods has been on expansion mode since the lifting of Covid-19 restrictions in April 2022. As a result, we incurred higher capital expenditure and our operating expenses rose in line with our expanded business activities.&rdquo

 

The group has proposed an interim dividend of S$0.003 per share for the current financial period, down from its S$0.01 per-share dividend for H1 in the previous financial year.

 

Japan Foods said it expects the next 12 months to be challenging due to prevailing conditions faced by the food and beverage industry, such as &ldquo intense competition, a manpower crunch and rising cost of operations resulting from inflationary pressures&rdquo . 

 

To mitigate such challenges, the group said it will continue to focus on controlling raw materials costs, and on improving operational efficiency by streamlining work processes and adopting technology.

 

RHB Research lowered its medium-term profit forecasts for food and beverage group to account for higher operating costs, resulting in a target price cut to S$0.45 from S$0.65 previously.

 

Analyst Shekhar Jaiswal slashed his profit forecasts by 37 per cent to 50 per cent from FY2024 to FY2026, after the group&rsquo s financials for the first quarter of FY2024 ended June &ldquo significantly&rdquo missed RHB&rsquo s expectations.

 

&ldquo The rise in expenses was mainly due to higher manpower costs, utility expenses, and depreciation charges of the right-of-use assets in line with higher revenue and business activities,&rdquo noted Jaiswal in a report on Tuesday (Sep 5). 

 

&ldquo While we expect the selling and distribution expenses to moderate, it may still come in higher in FY2024,&rdquo he added. 

 

Nonetheless, Jaiswal maintained his &ldquo buy&rdquo rating on the Singapore-listed stock, as he expects the group to register strong sales growth. 

 

This should be driven by the expansion of its halal restaurant brands, which have had strong customer demand and growth in revenue contributions, in Jaiswal&rsquo s view.

 

He also believes Japan Foods will maintain a close to 100 per cent dividend payout ratio from FY2024 to FY2026.

 

This implies a dividend yield of 5 per cent which would, in turn, provide &ldquo strong support (to the stock&rsquo s) share price at current levels&rdquo , said Jaiswal.

 

Japan Foods operates restaurants including Ajisen Ramen and Tokyo Shokudo.

 

RHB Bank Singapore analyst Shekhar Jaiswal is keeping &ldquo buy&rdquo on Japan Foods 5OI 0.00% , lifting his target price to 65 cents from 60 cents previously.

 

In his May 29 note, Jaiswal highlights that Japan Foods had reported a strong end to its FY2023 ended March with a record revenue of $78.5 million, up 44% y-o-y. This is on the back of strong momentum of its halal segment, the addition of new brands to its portfolio, as well as positive same-store sales growth for most of its brands.

 

&ldquo This was ahead of our expectation and is the highest revenue Japan Foods has ever reported since its inception in 1997. However, thanks to higher selling, operations and lease interest expenses, the reported profit of $4.1 million came in line with our expectations,&rdquo Jaiswal says.

 

Japan Foods&rsquo share of associated and joint venture companies also witnessed a 147% growth y-o-y amid the lifting of Covid-19 restrictions in Hong Kong. The company had declared a final dividend of 1 cent per share, Jaiswal notes.

 

Moving forward, Jaiswal expects Japan Foods to deliver 7% revenue growth in FY2024 on the back of an increase in the number of stores. The company should also see positive effects from its expansion into halal concept restaurants &mdash in order to increase operational efficiency, Japan Foods has to put in place a central kitchen specifically for halal restaurants, the analyst adds.

 

&ldquo We believe it will be able to maintain its gross margin at about 84.6%. We are expecting inflationary pressures to moderate in FY2024, which should translate into an expansion in its net margin to about 6% from 4% in FY2023. We estimate net profit to increase to $5.5 million from $4.1 million in FY2023,&rdquo says Jaiswal.

 

RHB has upgraded Japan Foods&rsquo FY2024 and FY2025 profit estimates by 8% and 9% respectively.

 

While the company has paid 85% of its net profit as dividends in its FY2023, the analyst expects it to maintain close to 100% dividend payout during the forecast period, implying a dividend yield of 5%. RHB views its ex-cash FY2024 P/E of 10.4 as compelling, given Japan Foods&rsquo robust growth potential.