Tuesday, 8 January 2008

Old Chang Kee Ltd


(Old Change Kee Store at Golden Shoe)

This is the first IPO stock on the Singapore stock exchange to be launched in year 2008 and i must say the Company is either very brave to have its IPO launched or very desparate for cash.
Westcomb did not set up any booth to distribute the prospectus and i believe that is financially wise since the public tranche is only 1m shares and this is really a 'microcap' company.

Share price - $0.20
No. of shares - 25m (24m placement, 1m public)
Issue Manager - Westcomb
Closing Date - 14 Jan 2008

With the post-ipo market cap of only $18.7m, this is really a micro cap company. My comments is that unless you are in love with Old Chang Kee curry puff and believes that the puff'o will dominate the world market one day like McDonalds, you avoid this stock. The financials for 2007 1st half actually showing the Old Chang Kee is 'stagnating' with no growth. Put it this way, the raw material prices are increasing but can OCK pass on the costs to consumers?

Assuming i give the most bullish forecast where 2007 EPS (post-IPO) is 3.5 cents, the Company is trading at 5.7x PE. I think that is already fairly valued for a company that is currently not showing any growth. With low barriers to entry and difficulty in scaling up this business, my suggestion is to avoid this counter and give it a 1 chilli rating. Perhaps this company may because more valuable as a 'shell company' for acquisition eventually (in a reverse takeover).



5 comments:

Loh Hon Chun said...

I have stopped patronizing Old Chang Kee after they raised curry puff price to $1.10.

A curry puff for $1.10! It's a luxury. Not worth the money.

hongjun

2Y Capital said...

Hongjun, some say the standard has dropped and no longer taste the 'same'. You have tip top and A1 waiting to fight the curry puff war here...

Loh Hon Chun said...

I agree with you on their drop in standard. I can easily get a more delicious curry puff from AMK Central and it cost 10 cents lesser.

Cheers
hongjun

Anonymous said...

Guess what happened to OCK's share price 5 years later... :D

Mr. IPO said...

Haha. I never follow. U made a killing ?

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