Old Chang Kee Ltd (“OCK”) is principally engaged in the manufacture and sale of Halal- certified food products of consistent quality under the brand name “Old Chang Kee”. Its signature product is the well-known Old Chang Kee curry puff which was launched in 1956. It currently has more than 30 food products. It has also introduced the sale of breakfast items and local delights meals at selected retail outlets. Its food products are sold through its retail outlets, mostly on a takeaway basis. The Company also owns other subsidiary brands such as Take 5, Curry Times, Bun Times, Mushroom Cafe, and Dip ‘n’ Go.
The home-grown snacks chain was listed on the Singapore Exchange – Catalist board on 16 Jan 2008, with an Initial Public Offering (“IPO”) of 25 million new shares at S$0.20 each.
Initiate coverage with “Buy” rating with a target price of S$0.98
We expect earnings to grow 8.9% CAGR over the next three years, following the consolidation of factory, realisation of manufacturing efficiencies, and new product offerings. Current forecasted FY17F dividend of 3.0 cents gives an implied forward yield of 4.5%. We initiate coverage on OCK with “Buy” rating and DCF valuation of S$0.98. This implies an upside of 42% (with dividend) from its last done price.
– Additional product lines at better margins to drive earnings
– Forecast Assumptions
We think Old Chang Kee will benefit from its expansion plan backed by strong cash position.
We initiate coverage on OCK with a “Buy” rating with a target price of S$0.98 based on discounted cash flow (DCF) methodology. This implies an upside of 42% (with dividend) from its last done price.
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