“The flat performance was partly attributable to the loss of a corporate customer, excluding this, non-outlet sales would have shown modest positive growth. Although the company has been introducing new food initiatives at its outlets, it hasn’t been spared from the broader F&B slowdown,” states Aw.
Back in his June initiation report on Old Chang Kee, Aw says that the company continues to prioritise expanding its non-outlet sales channels as a means of diversification and to improve utilisation of its central kitchen.
On the profitability front, Old Chang Kee’s gross profit was broadly unchanged, but EBITDA and PATMI declined by 8.1% and 19.3% y-o-y, respectively. The weaker bottom line was mainly driven by higher staff costs following wage adjustments under the government’s Progressive Wage Model (PWM), implemented in March 2023.
Under the PWM framework, workers’ wages are to increase by approximately 5-10% on average per year, from March 2023 to February 2026.
See also: Analysts upgrade TPs for ASL Marine after higher-than-expected 1QFY2026 earnings
In Aw’s view, he would like to see the company introduce new key catalysts to spur top line growth, especially given increasing cost pressures in the form of wages and rental.
“Current initiatives such as the introduction of new food sets at its outlets are unlikely to meaningfully grow profitability in the near-medium term, in our view, especially since its outlet count has generally remained stable for quite some time,” says Aw.
On the balance sheet front, Old Chang Kee remains healthy with a strong net cash position and total cash holdings of $56.2 million as of 1HFY2026.
See also: ‘Domestic construction boom’ to cushion S’pore’s trade-related GDP slowdown in 2026: DBS
Meanwhile, Aw states that Old Chang Kee’s management has begun exploring opportunities in the Ready to Eat (RTE) segment, including the potential rollout of some of its popular products like frozen curry puffs in supermarkets.
“We view this as a positive, as it aligns with the group’s strategy to grow its non-outlet sales channels. These initiatives are not expected to require additional capex, as the production of RTE products can be supported by existing machinery,” adds Aw.
As at 3.32 pm, shares in Old Chang Kee are trading flat at $1.12.
