Shares of Kura Sushi Asia Co Ltd (亞洲藏壽司) soared on its debut on the Taipei Exchange’s Emerging Stock Board on Friday. It is the first Japanese conveyor-belt sushi chain to trade its shares on the exchange.
The stock surged 218.75 percent to an intraday high of NT$102 before settling at NT$94 at the close of the day’s session, compared with its initial public offering (IPO) price of NT$32.
The company is a local subsidiary of Osaka-based Kura Sushi Inc, which is the second-largest low-priced conveyor-belt sushi chain in Japan, with a total of 433 stores.
Established in 2014, Kura Sushi Asia operates 18 outlets in Taiwan with a flagship store on Taipei’s Guanquian Road.
The company plans to open five to 10 stores per year and up to 50 outlets in Taiwan in the mid to long-term, its prospectus shows.
Thus far, two other major Japanese sushi chains, Hama Sushi and Akindo Sushiro, have launched seven and four outlets respectively in Taiwan since 2016 and last year.
“Kura Sushi Asia will accelerate the pace of its store expansion in Taiwan after its IPO, as it will then have the capital and talent needed,” Yuanta Securities Investment Consulting Co (元大投顧) said in a note on Friday. “Given that the waiting time for lunch or dinner is still about 120 minutes on average during peak hours, we believe demand is sufficient to support store expansion.”
Due to a steady increase in wages and more people eating out on a regular basis, Taiwan’s foodservice industry has reported a compound annual growth rate (CAGR) of 3.4 percent in revenue from 2013 to last year, with restaurant sales also seeing a CAGR of 3.4 percent over the five-year period, Directorate-General of Budget, Accounting and Statistics data showed.
This year, the nation’s food and beverage industry remains resilient despite slowing economic growth, with combined revenue rising 5 percent annually to NT$336.4 billion (US$10.83 billion) in the first five months, the Ministry of Economic Affairs reported on Monday last week.
“The low-priced conveyor-belt sushi restaurants are more resilient in economic cycles, which is evidenced by the stable single-store-sales [SSS] growth and continued store expansion among Kura and major Japanese sushi chain peers in past years,” Yuanta said.
“However, we note that SSS growth might not be the best indicator of whether Kura’s Taiwan business would be resilient in the face of economic cycle changes, as it is still in the early stages of expansion, when store traffic is typically higher before normalizing,” the consulting firm said.
With paid-in capital of NT$379 million, Kura Sushi Asia reported revenue of NT$1.44 billion last year, up 70.12 percent year-on-year, thanks to each person spending NT$300 to NT$350 on average and a high turnover rate.
Net income increased 83.51 percent to NT$107 million last year, with earnings per share of NT$3.4 and gross margin of 62.02 percent, company data showed.
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