In an interview earlier on in the year, I talked about Old Chang Kee as being a very rewarding investment for me. I also mentioned how a 5c dividend which went XD in January was a pleasant surprise.
Well, Old Chang Kee announced a final dividend of 1.5c for FY2013. This is nice although I will be receiving half of what I would usually receive in absolute amount since I divested half of my investment in the company earlier on in the year.
Amidst rather more difficult business conditions, Old Chang Kee's management has shown a high level of business savvy as they improved production efficiency, closed non-profitable outlets and revised prices last December. As of March 2013, it had a total of 76 outlets in Singapore which is 6 outlets lesser than a year ago.
Net profit improved from $4.51m to $4.98m and EPS improved from 4.75c to 4.96c. These figures are on the back of improved gross profit margin from 60.1% to 61.4%.
What is more impressive is that the $4.51m net profit for the preceding year was based on a 15 months financial year because Old Chang Kee announced a change of its financial year in August 2011.
So, if we were to assume an average net profit of $1.245m per quarter in FY2013, over 5 quarters would give us $6.225m. This means that net profit increased almost 40%, year on year. Impressive!
Business costs are expected to remain high but Old Chang Kee's management have, so far, impressed with their business savvy and with the brand deeply entrenched in Singapore, it is reasonable to expect the company to continue doing well.
At 56c a share, PER is 11.29x. Not cheap but not expensive either. I would say it is fairly valued. What am I going to do now? Wait to receive the dividend and maybe buy some curry puffs tomorrow.
Related posts:
1.
Old Chang Kee: Have my curry putt and eat it too.
2.
Old Chang Kee: Initiated long position at 26c.
3.
Tea with AK71: An audio interview.
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