About one year after acquiring certain assets of the Balai Pandesal business, Fruitas Holdings (PSE: FRUIT) successfully listed its subsidiary Balai ni Fruitas (BALAI) last June 30. “The listing opens more opportunities for us to be nimble and respond to our customers’ evolving preferences. The IPO proceeds and the Company’s strong cash generation from our operations will allow us to aggressively grow our business,” Balai ni Fruitas Inc. President and CEO Lester Yu said.
The IPO raised about PhP203.8 million in net primary proceeds for BALAI (The Company) and minimum gross proceeds of PhP35 million for FRUIT, with additional proceeds potentially coming after the price stabilization period.
FRUIT is expected to book a one-time gain on the sale of existing shares in Balai ni Fruitas, which will result in an increase of its equity. Proceeds at the FRUIT level will be deployed into new strategic initiatives, including the acquisition of “Ling Nam Wanton Parlor and Noodle Factory since 1950”.
The Company has aggressively expanded the Balai Pandesal brand from 5 stores at time of acquisition to 38 stores as of June 2022. The Company opened 3 new Balai Pandesal stores in different parts of Metro Manila in June 2022 which include a community store in Brgy. Fairview Park, the first Balai Pandesal local bakery in Brgy. Krus na Ligas, and the first Balai Pandesal kiosk in Ayala Malls Cloverleaf. BALAI targets to grow its Balai Pandesal store network to 130 by 2023, and 200 by 2026.
BALAI Pandesal products are also available in 54 stores within FRUIT’s store network, including some of FRUIT’s other community stores. The Company also targets to acquire or introduce value-adding concepts which would fit into its baked goods lineup. The Company continues to look at significant opportunities within the more than US$6 billion baked goods segment in the Philippines. In evaluating opportunities in other segments, the Company will remain disciplined in evaluating key financial criteria, including profitability, and working capital requirements.
BALAI reported FY2021 revenues of PhP148.9 million, a 35% increase from its FY2020 of PhP110.1 million. BALAI also recorded FY2021 net profit of PhP8.5 million, which was driven by the addition of the Balai Pandesal brand and strong performance of its stores. Its FY2021 results included revenues of PhP60.3 million and net profit of PhP6.3 million in 4Q2021 alone.
For the first quarter of 2022, BALAI recorded PhP60.6 million of revenues and net profit of PhP6.4 million, and already at 41% and 75% of expected full year 2021 levels. This was achieved despite stricter mobility restrictions particularly in January 2022. The Company expects even faster growth in subsequent quarters. It is important to note that the gross margin was maintained at relatively the same level of 51.2% for 1Q2022, compared to 52.2% in FY2021 despite pressures from increasing raw material costs.
FRUIT aims to replicate the organic expansion that it has done for other small acquisitions such as de Original Jamaican Pattie, Sabroso Lechon, The Tofu Store (re-branded into Soy & Bean) and successfully integrated them into its ecosystem. Through the Balai IPO, Fruitas continues its objective to be a ubiquitous food and beverage company with increased penetration and scalability in the market.