Report on Old Chang Kee’s Financials as at 31st March 2014
1 ACKNOWLEDGEMENT
Our Project Team would like to take this opportunity to specially thank Mr. Tan Geok Kian, our Accounting and Finance Lecturer, for his guidance and patience throughout this Project.
Kudos to each and every member of the group for the invaluable contribution to this Project Work. May we always persevere!
Team Members: Elroy Chan (Team Leader), Nordian Ibrahim, Sharon Tan, Hazimah Ishak, Junainah A Latif and Kenneth Wong.
2 CONTENTS
Contents
1 Acknowledgement 1
3 Executive summary 3
4 Background information 4
5 Swot Analysis 4
6 Financial Ratio Analysis and Recommendations 6
6.1 Leverage Ratios 6
6.2 Liquidity Ratios 6
6.3 Efficiency Ratios 7
6.4 Profitability
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5 SWOT ANALYSIS
A SWOT Analysis was conducted to identify Old Chang Kee’s opportunities and threats.
Old Chang Kee’s natural attributes that can be identified as strengths are:
• The brand Old Chang Kee continued to be a popular household name that is synonymous with Singaporeans having been around for more than half a century. The company was able to maintain its quality having had won several Prestige Brand Awards.
• It was able to capture a wider market share when it went ‘Halal’ in 2005, thus making the local snacks available for every Singaporean ‘regardless of race and religion’.
• It has a strong management team that has continued to steer the company to sustain growth.
Despite its natural attributes, Old Chang Kee has its fair share of internal weaknesses:
• There were times that quality of food was found to be compromised.
• Lack of presence at locations where heavy human traffic could be easily found. Examples include Changi Airport and NUH.
• Prices of these snacks have been increasing every year since
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This is shown in the dividends that were paid out to Shareholders which increased from 17.9% in 2013 to 20.3% in 2014.
The high return on equity creates a positive impact to the business, making it lucrative for current investors to continue with their investments whilst making the business attractive to new investors. Nevertheless, the Management need to ask if the Group could sustain the increasing trends in dividends.
6.5 INVESTMENT RATIO
There is an increasing trend in the Group’s allocation of its profit to each outstanding share as measured through the Earnings per Share Ratio. Earnings per Share rose to 0.0497 times in 2014 compared to 0.496 times in the previous year.
However, the net assets value per share dropped slightly to 0.259 in 2014 from 0.393 in 2013. The decrease in net assets backing per share reflects a reduction in the net worth per share. Although the drop is insignificant, the Management may want to study its underlying signals to improve its investment ratio to attract more investors and confidence of its
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Total Asset Turnover – Dropped from .64 in 2001 to .58 in 2002 to .55 in 2003. The reason is big increase in Total Assets.
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The basic earnings per ordinary share in 2016 is RM19.14 and RM14.30 in 2015. This shows that the ordinary share had been increased RM4.84 compare to 2016 based on 2015. In the other hand, this company had declared a first interim single-tier dividend of 10 sen per ordinary share amounting to RM22.88 million in respect of the financial year ended 31 December 2016. They sold their ordinary shares of RM400,000,000 units of RM0.50 per each in 2016 and RM200,000,000 units of RM0.50 per each in 2015 to their shareholders. It is increased from 2015 to 2016 with 200,000,000 units. The other investments that available for sale is RM1000 same as in 2015 and 2016.