A Look at a Food Retailing Business – Auric Pacific Group Ltd (SGX:A23)

APGL

 

 

 

 

 

 

 

If you have ever eaten in Delifrance or Food Junction for a bite, then you were probably a customer of Auric Pacific Group  Limited (SGX: A23) .

 

Auric Pacific Group Limited (APGL) is a locally incorporated investment holding company offering a wide range of businesses including food and non-food distribution, food manufacturing, food retailing and restaurant management. The Group’s businesses and operations extend not just in Singapore but in Malaysia, Hong Kong and China as well. APGL is 49% owned by the Riady family which forms part of the conglomerate Lippo Group that was founded in early 1950.

 

Here are some of APGL’s businesses, namely:

 

Distribution & Marketing

Represented through its subsidiaries, Auric Pacific Marketing Pte Ltd and Auric Chun Yip Sdn Bhd, the Group markets and distributes house brands such as Sunshine, Gourmet, SCS, Twin Cows and Buttercup.

 

Food Manufacturing

APGL’s Sunshine Bakeries has been around for 80 years and is one of Singapore’s most established and largest bread manufacturers, producing the commonly known Sunshine bread together with rolls, buns and cream rolls. In addition, APGL also has a premium bakery arm, Delifrance which manufactures European par baked frozen breans, pastries and savouries and distributes to hotels, restaurants and airline carriers.

 

Food Retailing

APGL owns a range of food & beverage outlets. Apart from operating Delifrance Asia Ltd and Food Junction Holdings Ltd, the Group also manages a diverse range of restaurants such as 1Market, Medz, Alfafa and Eggs & Berries.

 

As mentioned in a previous article, the food & beverage businesses in Singapore is highly competitive and disruptive. Combine that with a high operating leverage and increasing labor costs in the business would spell trouble if your products are unappealing to consumers. APGL’s revenue has stagnated over the past 5 years, averaging between S$380 million to S$400 million. Earnings before taxes came into the red in 2012 and 2013 as a result of higher operating expenses and a one-off exceptional items (due to a write-down  in some of the loss making outlets of Delifrance and Food junction) in 2013.

 

Value In Action

Despite the highly competitive business that is food & beverages, with a new CEO at the helm of the company could see some potential turnaround in the Group’s business.

 

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All views and opinions articulated in the article were expressed in Willie’s personal capacity and do not in any way represent those of his employer and other related entities. Willie does not own any shares in the companies mentioned above

 

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