Karaoke chain operator Goodwill Entertainment to list on SGX Catalist

10 Oct 2024

Khairani Afifi Noordin & Nicole Lim
Thu, Oct 10, 2024 • 08:10 PM GMT+08 • 8 min read

Source: The Edge

Karaoke chain operator Goodwill Entertainment to list on SGX Catalist

Entertainment company and karaoke chain operator Goodwill Entertainment has filed its preliminary offer document in anticipation of listing on the Catalist board of the Singapore Exchange SGX (SGX) on Sept 27. The company is slated to complete the registration of its offer document on Oct 25, when there will be more information about its offer price and market capitalisation.

Goodwill Entertainment operates 12 "multi-entertainment" concepts across Singapore, including karaoke facilities, performance halls and dance clubs.

The news of Goodwill's listing on the Catalist comes after 10 months of negligible listing activity, as Singapore re-energises its moribund stock market.

Only one company — the Singapore Institute of Advanced Medicine Holding — has listed on the Mainboard this year, while another — Food Innovator Holdings — has recently announced its intention to list on the Catalist. Two others that have lodged their prospectuses have withdrawn their application: LYC Medicare Singapore and A Wellness Holdings.

Goodwill's founder and CEO Flint Lu established the karaoke chain "HaveFun Family Karaoke" in 2015. Born in mainland China, Lu has spent the past two decades in Singapore and has gained citizenship. The former contestant on The Voice of China, a popular television singing competition, brought the show to Singapore in the same year the company was founded.

Lu also used to own freight forwarding company Twinstar Logistics, before fully divesting his shares last year.

Now, Goodwill is ready for its next stage of expansion, which led to the decision to list on the Catalist. Lu tells The Edge Singapore that the Catalist listing requirements are more flexible, which allows for younger companies like his to raise capital and attract investment. This will help to grow and build its reputation as a leading entertainment company in Singapore and beyond.

Although Lu acknowledges that there are other more active bourses in the region, being listed on the SGX would be better for the company given Singapore is its home base. Goodwill has a strong brand presence in the city-state, and a local listing would give the company visibility among investors who understand the nuances of the country’s entertainment sector.

Upon a successful IPO, Goodwill will be the first company listed on the SGX with a primary business in running a karaoke chain, unlike 9R and Vividthree that run other primary businesses. This may be a double-edged sword — although Goodwill may gain a first-mover advantage, there is a risk that investors may not be able to fairly value the company and grasp its growth potential.

Lu highlights that Goodwill has proven it can be more than just a karaoke chain operator. For instance, during the “circuit breaker” period in 2020 when interactions in public and private places were restricted, the company had to pivot into new businesses including F&B distribution.

Today, the company has expanded its F&B offerings under its “Sticks N Stones” brand, integrating it into its entertainment venues.

“Our foundation lies in our karaoke outlets, but we have successfully expanded into other business verticals. With an evolving vision, we continuously study and learn from successful companies and entrepreneurs to keep innovating and improving,” Lu adds.

Surviving Covid-19

Currently, Goodwill derives the majority of its revenue from its karaoke outlets located islandwide. Each outlet provides its customers with a variety of amenities, from private cinemas to pool tables, dart machines, as well as board and console games. As part of its multi-entertainment strategy, some of its karaoke outlets have performance halls that serve as an event space for live band performances and meet-and-greet events, among others.

The company’s flagship outlet at Cineleisure Orchard also features its first dance club dubbed FATEbyhavefun, which provides its customers with a full “night-out” experience, Lu explains.

Goodwill has also newly launched a multi-entertainment concept "HaveFun Live Show", a mega live entertainment house established with its partner Hezhong Entertainment Culture co.

While Lu does not elaborate on the profit margins of running the karaoke business, the company is recording stable financial results, having recovered from the pandemic when its business suffered greatly.

During those years, Goodwill did not let go of any of its staff members, and pivoted to renting out all-in-one karaoke machines that were delivered to homes and hotel rooms. Its F&B business, which was introduced then to generate extra revenue streams during the lockdown, helped to ease financial pressures.

When restrictions slightly eased, Goodwill started offering private movie screening sessions in its karaoke rooms, catering to small groups of customers. This, together with lease re-negotiations, allowed the company to stay afloat. In FY2021 ended December, Goodwill's revenue stood at $930,000.

Business bounces back

As operations ramped up following further economic reopening, the company managed to post a turnaround story, with revenue surging $16.5 million in FY2022. The following year, revenue grew to $23.9 million — this translates to a CAGR of about 366% over the three-year period.

Net profit similarly grew, from a loss of $3.4 million to a profit of $3.2 million in FY2023. This follows pent-up demand for entertainment services, as customers returned to Goodwill’s karaoke outlets and live show venues. As of Dec 31, 2023, Goodwill’s liabilities stood at $7 million, while net operating cash inflow stood at $7.8 million.

Lu highlights that for 1HFY2024 ending June, Goodwill achieved $23.2 million in revenue, nearly equivalent to its full year revenue last year.

Goodwill’s most profitable locations differ every year, but the city outlets such as Bugis+ and Cineleisure Orchard always perform better than its outlets in the heartlands such as those in Toa Payoh and Pasir Ris, Lu says.

The low barriers to entry for new karaoke operators and ease of application for operating licences make the sector highly competitive. Despite this, Goodwill is still planning to open new outlets in Singapore. Lu believes that there is ample opportunity to further grow its business.

For one, compared to its competitors, Goodwill invests heavily in bringing in quality equipment, which it sources from China, where the karaoke sector has boomed. Additionally, the company also analyses the needs and wants of its Singaporean customers, customising its services to fulfill the local demand.

Vision for the future

From now until the registration of the offer document on Oct 25, Lu and his team will be busy convincing retail and institutional investors to take a shot at his karaoke company. Lu has already met a few prospective investors through the arrangements of the company's sponsor and placement agent Evolve Capital Advisory and Haitong International Securities, receiving “very positive” feedback.

But the CEO is not losing sight of his bigger goal — to create a successful business to fulfil market demand, and use his resources and knowledge to help entrepreneurs expand into the Singapore market.

He reflects on past encounters with a pioneering entrepreneur in the Chinese F&B entertainment space, who has over 1,000 entertainment outlets in Nanjing City through the co-ownership of smaller brands. “The inspiration is not only how many outlets [the entrepreneur] managed to open in a single city, but the fact that he also trained and helped a lot of individuals to become business owners themselves,” says Lu.

For now, Lu sees potential in the F&B entertainment industry in Singapore and also Malaysia, given the cultural similarity. The company has set up an office in Malaysia, and is currently in the midst of discussions with venue owners in Kuala Lumpur and Genting Highlands. By 2025, Lu expects Goodwill to have a strong foothold in Malaysia and aims to enter additional Southeast Asian markets such as Indonesia, Thailand and Vietnam.

When asked about the most challenging part of running a business, he says: “Covid-19 could not get rid of us, so there’s no challenge bigger than that we cannot overcome.” Instead, a more important existential problem looms — Lu will need to align his employees to share the same vision as him.

Now, at this stage of growth, Lu’s team across the board needs to have a good understanding of his industry and sound judgement. Only with the right people will the company be able to grow to the next stage, he adds.