By most financial metrics, Old Chang Kee is a model of resilience. Much of that has to do with Singaporeans’ love for all things deep-fried. Consider this: As a listed entity, Old Chang Kee has never been in the red, not even during the Covid pandemic (although government aid did help shore up its bottom line during the lockdown).
National campaigns advocating healthier eating have also done little to dent appetite for its time-tested treats. Remember the Health Promotion Board’s warning in 2011 that Singaporeans consume 60% more salt daily than they should? Or the Ministry of Health’s declaration of war on diabetes in 2016?
It’s no surprise that Old Chang Kee outlets are found everywhere in Singapore, its largest market by revenue. Since its trading debut on the Singapore Exchange(SGX) in 2008, the company has been fairly aggressive in increasing its store count. Even after shuttering a few over the years, due to factors like high rental and lower-than-expected footfall, it still has a sizeable chain of 80 outlets island-wide, compared to 54 in 2008.
Venturing overseas
But while it has generally done well in Singapore, its overseas forays have shown far less promise. Back in 2008, it had three outlets that it managed on its own in Chengdu, the capital city of China’s Sichuan province, and several in Jakarta and Manila under franchise agreements.
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The plan then was to use part of the $3.3 million net proceeds from its IPO to open at least three more stores in China within two years. Malaysia, Thailand and Australia were also markets it had wanted to penetrate.
Fast forward to today, only Malaysia and Australia are in play for Old Chang Kee. The combined sales of both markets are negligible, though, accounting for not even 1% of its entire revenue of $102 million for FY2025 ended March 31.
Investor scoreboard
It may not be a darling of the stock market, but Old Chang Kee has delivered where it matters.
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Earnings rose above the $10 million mark for the first time to $11.3 million in FY2025. That was a 17.4% increase from the previous year, underpinned by record revenue of $102 million. Its 11.8% return on assets in FY2025 is the highest in more than five years. Return on equity for each of the last two years was 20%, up from 15% in FY2023.
Old Chang Kee was one of seven Singapore firms that made it to Forbes’ 2024 list of Asia-Pacific’s top 200 public companies with annual sales of not more than US$1 billion ($1.3 billion).
The company has no fixed dividend policy but shareholders do get something every year. It’s been paying 2 cents a share annually since FY2021. That’s a 21% payout based on its FY2025 earnings. Its biggest dividend, declared in FY2016, was 6 cents a share.
It has very little debt and, as at March 31 this year, had net cash of $50.8 million, which works out to 41.8 cents per share. That makes up nearly 90% of its latest reported net asset value of 47 cents per share and amounts to 43% of the stock’s 52-week high of 97 cents.
A pet peeve among some investors, however, is the company’s small free float of barely 15%. With so few shares to go around, anyone hoping for a bigger bite often goes away hungry.
Han, Old Chang Kee’s founder and executive chairman, owns a direct stake of 58.6%. His wife, Ng Choi Hong, owns 7.3%. Far East Organization and the family of the late Ng Teng Fong, who founded the property conglomerate, are also substantial shareholders, with a combined stake of 12%.
What’s next?
Old Chang Kee’s substantial cash pile gives it the firepower to scout for acquisitions — a move it has hinted at as it looks beyond organic growth.
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At its AGM in July last year, it said the cash will be handy as it is regularly approached by certain parties to explore mergers and acquisitions. It may also use the funds to expand its factories. It’s also looking at expanding into B2B sales to diversify its revenue stream.
Whatever the intent, it probably won’t hurt Old Chang Kee to take on some debt to fund expansion, given the strength of its balance sheet. Investors may even be willing to accommodate an equity raise, considering its last cash call was in 2010, when it pulled in a modest $1.2 million through a sale of warrants.
That said, will it join the growing list of companies delisting from SGX? After all, it hasn’t raised any funds from the market for more than 10 years. And it probably won’t cost the controlling shareholders an arm and a leg to buy out the rest of the company they don’t already own, since its current free float is not far off from the mandatory 10% baseline.
With its decent earnings and returns on equity, coupled with a war chest ready for expansion, Old Chang Kee has been quietly building a case over the years as one of the more reliable value creators on SGX. Add in the potential for M&As and B2B growth, and this snack giant could be just getting started. For investors, the only real frustration is how hard it is to buy more.
