Buying old IPO later? Oldtown?

After months of being away from the markets, my old investment engine is finally cranking but with no guarantee I'll be active. Oldtown is the first company that I study. No particular reason. It's a long prospectus, 754 pages. To be perfectly honest, I did not read the details. The following posting is just my impression after skimming the documents.

Oldtown is not that old. It's only 12 years old. Within a short span of time, the company grow from nothing to 250 million is really something. Management team is relatively young, mid thirties to early forties.

Oldtown is a cafe operator and also a beverage manufacturer. Based on their revenue mix, I think they are more of a cafe operator. 65%(166 mln) of their revenue is coming from cafe operations while the remaining 35%(89 mln) from beverage manufacturing. In fact I think their venture into cafe business was the main growth catalyst and is brilliant. A cup of coffee that they sold at a cafe will be equivalent to 10 packets of coffee sachets. Both businesses are profitable. The key issue I want to investigate is scalability, if I want to invest in this company.

They operate 182 Oldtown cafe and plan to open another 118 cafe withing three years. Average revenue(own cafe, product sales to franchisee and franchising) per outlet is 912 k. Another 118 new stores will add another 107 million potential revenue. Adding up $ 107 mln to $ 250 mln, the potential size is 357 million. Average profit after tax is in the region of 12-15%. Looking into 3 years forward, EPS will be around $ 0.16.

I did a rough calculation to just ensure my rationality is grounded. Some facts and assumptions tests. We have a population of 27 million and 20% are Chinese. Let's assume 30% of the Chinese probably will visit Oldtown 4 times per year and per spending per person is about 30. That will work out to be 194 mln revenue potential. Assuming I was wrong, there are other ethnics will visit oldtown, let's assume 10% of non-Chinese and hold other variable constant. So the potential revenue will be about $ 450 million. The question is can they expand their sales to non-Chinese?

The next question is can they go regional? Singaporean probably will still buy the concept of Kopi O and Nasi lemak but will Indonesian, Hong Kee, Thais, Filipinos? Regional cafes concept is difficult to succeed based on what I see now, unless they change their business model or menu. But the beverage side of business can go regional but it has to compete with giant multinational or local brands. And it's a volume game.

I think you know where I'm leading you. However, when this new IPO becomes old IPO and dips below crazy price ..... with their resilient business model ........ we can place some chips betting on reversion to mean. But I certainly will not subscribe to their IPO.