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

Last week, Old Chang Kee Ltd (SGX: 5ML) released its 2018 fourth quarter (4Q 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 10.5% year-on-year to S$21.3 million.

2. Operating profit for the quarter turned to a profit of S$1.8 million from a loss of S$2.4 million a year ago. The improvement in operating profit was due to the absence of revaluation deficit for the group’s factory in the latest quarter.

3. Profit after tax improved from a loss of S$2.1 million to a profit of S$1.4 million, mainly due to the reason mentioned above.

4. Similarly, earnings per share improved from a negative of 1.73 cents to a positive of 1.13 cents.

5. Gross profit margin remained flat at 63% in the latest quarter as compared to the previous year.

6. In 4Q FY18, Old Chang Kee generated net cash from operating activities of S$3.7 million, used S$1.8 million in capital investments and used S$0.6 million to repay loans. As at 31 March 2018, the company’s cash and cash equivalents stood at S$12.8 million.

7. Total borrowings increased from S$10.5 million, as at 31 March 2017, to S$11.3 million, as at 31 March 2018.

8. Net working capital dropped from S$4.3 million, as at 31 March 2017, to S$3.7 million, as at 31 March 2018.

9. In the latest quarter, Old Chang Kee recommended a final dividend of 1.5 cents per share, same as exactly one year back.

10. In terms of outlook, the company commented:

“The Group’s first flagship outlet in Covent Garden – London, United Kingdom is on track to open in June 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.

Following the completion of the new factory facilities and the commissioning of new factory equipment, the Group will focus on improving its gross margins and revenues. These efforts include continued investment in brand positioning, bulk purchases at more favourable prices with the expanded factory space, further expanding its product range including seasonal product launches, and increasing the production efficiency of its factories.”

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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.