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10 Quick Things Investors Should Know From Old Chang Kee Ltd’s Third Quarter Results

Recently, Old Chang Kee Ltd (SGX: 5ML) released its 2018 third quarter (3Q FY18) earnings. The company has been around since 1956, growing from a single stall outside Rex Cinema to 92 outlets, as at 31 December 2017. Old Chang Kee may be best known for its signature Curry’O puff, a popular Singapore snack.

Here, we will look at 10 things that investors should know from the firm’s latest financial results:

1. Quarterly revenue improved 9.6% year-on-year to S$22.2 million.

2. Operating profit for the quarter declined 13.8% to S$14.6 million. The lower operating profit was driven by higher raw material and rental costs.

3. Quarterly profit after tax fell 9.3% year-on-year to S$1.2 million.

4. Similarly, earnings per share (EPS) dropped 9.7% to 1.02 cents.

5. Operating margin went down from 8.3% to 6.5% in the latest quarter. The lower operating margin was due to the higher costs mentioned above.

6. In 3Q FY18, Old Chang Kee generated net cash from operating activities of S$2.1 million, used S$1.8 million in capital investments and paid S$2.3 million on dividends and repayment of loans. As at 31 December 2017, the company’s cash and cash equivalent stood at S$11.1 million.

7. Total borrowings increased from S$10.5 million, as at 31 March 2017, to S$11.5 million, as at 31 December 2017.

8. Net working capital slipped from S$4.3 million, as at 31 March 2017, to S$3.2 million, as at 31 December 2017.

9. In the latest quarter, Old Chang Kee reported a loss of S$19,000 in a joint venture in United Kingdom, mainly due to start-up costs.

10. In terms of outlook, the company commented:

“The Group’s first flagship outlet in central London, United Kingdom is on track to open in 2018, generating new revenue streams for the Group and uplifting Old Chang Kee’s brand positioning.

On the current operations, the Group expects rental, labour and raw material costs to remain high in the next reporting period and the next 12 months, and believes that the labour market will continue to remain tight.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.