(June 9): Our Singapore Market Portfolio gained1.07% over the period of May 30 to June 6, slightly outpacing the 0.96% gain in the Straits Times Index. Most of our holdings rose, among them curry puff seller Old Chang Kee. The company had disappointed us on earnings, but the market seems to be betting that things will improve. Shares of the company rose 3.7% to close at 84 cents.

After speaking to Song Yeow Chung, Old Chang Kee’s group financial controller, we are more confident in our pick too. Old Chang Kee is set to benefit from the integration of its factory in Iskandar Malaysia and its expanded factory facilities in Singapore in the coming months. This will provide a platform for the company to expand its product range and grow its business.

The company’s earnings have been weighed by increasing operating expenses as it opens up new outlets. For FY2017 ended March 31, selling and distribution expenses climbed 6.9% to $2.1 million. This amounted to 41.3% of revenue, up from 40.9% in the previous year. Most of the expense increase was attributed to staff and outlet rentals. Administrative expenses also rose 7.6% to $819,000, arising mainly from wage adjustments for head office staff. This comprised 14.8% of total revenue compared to 14.6% previously.

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