Mudman eyes profit turnaround, paving way for planned listing on MAI board 

Corporate February 08, 2017 01:00


MUDMAN, operator of international retail food brands such as Dunkin’ Donuts and Au Bon Pain in Thailand, said it expected to turn a profit this year after booking a major impairment loss and amortisation last year.

The company and its financial adviser, Siam Commercial Bank, and lead underwriter, Maybank Kim Eng Securities (Thailand), held a press conference yesterday to announce that the Securities and Exchange Commission has begun the countdown on the filing of Mudman, which is scheduled to list on the Market|for Alternative Investment by next quarter.

To be listed under the “MM” ticker, Mudman is seeking to sell 210.98 million shares, or about 20 per cent of its paid-up capital, after the initial public offering. About half of the IPO shares will be offered to shareholders of Sub Sri Thai, Mudman’s Stock Exchange of Thailand-listed parent company, and the other half to the general public.

Mudman reported a net loss of Bt151 million for the first nine months of last year, increasing from a net loss of Bt46 million recorded a year earlier. The company attributed the losses mainly to an impairment cost of Bt155 million and purchase price allocation (PPA) amortisation amounting to Bt53 million that it booked in the third quarter in preparation for its share-flotation plan.

Mudman chief financial officer Hansa Sermsri said there would be no more impairment losses derived from the fashion business of the Greyhound Group that it acquired in 2014. PPA amortisation, however, will continue for many years depending on contracts that it has signed for franchise brands.

“We expect a small profit this year, since there are still some PPAs,” she said.

Hansa said Mudman would restructure and downsize its fashion business that incurred a loss of Bt10 million last year, aiming to achieve break-even point this year.

However, its Greyhound Cafe, which runs a Thai-food restaurant franchise at home and abroad, is growing quickly and is highly profitable. With 13 branches in Thailand and 12 overseas (mainland China, Hong Kong, Malaysia and Singapore), Greyhound Cafe contributed more than Bt40 million of profit to the group last year. It recently awarded the right to operate its Greyhound Cafe to a local operator in Indonesia.

Mudman chief executive Nadim Xavier Salhani said the company planned to invest between Bt80 million and Bt90 million to open its first Greyhound restaurant in London this year, to showcase the business to interested investors in Europe.

Mudman achieved revenue growth of 24.8 per cent from 2013-2015, mainly due to the acquisition of Greyhound Group. Excluding Greyhound, the firm would have booked an average compound growth rate of 3.7 per cent during the past three years. Mudman’s revenue grew by 4.4 per cent during the first nine month of last year, reaching Bt2.24 billion. 

Dunkin’ Donuts, Au Bon Pain and Greyhound Cafe contributed 89 per cent of total revenues, and all of Mudman’s net profit during the first nine months of 2016.

Salhani said Mudman would invest Bt200 million to Bt300 million annually to expand its Dunkin’ Donuts outlets from 296 at the end of the third quarter 2016 to 343 by 2020; Au Bon Pain, from 71 to 96; Baskin Robbins, from 31 to 54; and Greyhound Cafe, from 13 to between 19 and 22 outlets.

Montree Sornpaisarn, chief executive of Maybank Kim Eng Securities, said Mudman had potential to grow both in Thailand and overseas, at an “exponential” rate. The losses incurred were attributed to one-time items and it would now be able to grow from a low base.

Excluding impairment loss and PPA amortisation from past acquisitions, Mudman would have booked a net profit of Bt27 million in 2015 and Bt57 million for the first nine month of last year.

Mudman’s debt-to-equity ratio will be brought down from 1:1 after the IPO, Hansa added.