Old Chang Kee H2 profit jumps 52.6%! Buy now?

For readers who who are not subscribed to my YouTube channel or who simply prefer reading blogs to watching videos, this is the transcript of another recent video I produced.
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I first invested in Old Chang Kee in 2011.

At the time, I said that Old Chang Kee's food kiosks were ubiquitous and always seemed to be doing good business.

I also thought that the business was relatively recession proof.

It was very much like property developers selling shoe box apartments.

The smaller monetary quantum makes them more affordable.

I did not think that, in a recession, we would see people cutting back on their favourite curry puffs, sotong sticks or yam cakes in a big way.

Old Chang Kee could increase their prices by 10 cents per item and it would not feel like much to the consumers.

However, it would improve their top line and bottom line immensely in percentage terms.

Think of a 10 cents increase on something that costs $1.

That's a 10% increase and definitely not something to sneeze at.



I also liked that Old Chang Kee paid regular dividends and would look at it from time to time.

Some readers like to ask me if I think Old Chang Kee would be worth investing in these days.

Of course, I would side step such questions.

I would tell them that when Old Chang Kee was trading at 38 cents per share in 2011, I found it too expensive.

I only bought some at 26 cents a share.

Based on a 2 cents dividend per share, that is a dividend yield of almost 7.7% on cost.

Since I sold half of my investment at 52 cents a share, my current investment is also free of cost.

I am getting free money every year or, as I like to say, free curry puffs.



Back in 2011 when I invested in Old Chang Kee at 26 cents a share, it was trading at a PE ratio of slightly more than 12 times.

Its gross profit improved 11.6% while net profit improved 25.9%.

In the latest report, Old Chang Kee reported that H2 profit increased 52.6% on higher sales.

Looks like my free curry puffs are secure this year.

So, should we invest in Old Chang Kee today?



If I am not mistaken, PE ratio for Old Chang Kee is closer to 16 times today.

That seems pretty expensive to me.

Also, Old Chang Kee's shares are thinly traded and it is rather risky to put in overnight buy orders.

If I should be interested in buying, it would be a good idea to look daily to see if anyone might be selling at a price and volume which make buying worthwhile to me.

If AK can talk to himself, so can you!

Reference: 

OLD CHANG KEE: Bought at 26c.