Homepage
PR Newswire
The previous "in depth" discussion on OCK was done many years ago. From FY13 onwards, OCK embarked on their expansion project, spending ~45mil (inclusive of regular CAPEX) in the next 6 years till FY18 to transform their central kitchen. It might be interesting to take a look again:
Asset:
- Working capital: Inventory~11days, receivables~2days, payables~100days --> negative 87days (or close to 3 months) as for any retail facing business.
- 10% geared as of FY23. The debt are amortizing mortgages for its PPE invested between FY13-18. For context, peak gearing was ~40% back in FY18.
- In essence, the balance sheet is made up of ~85% cash, ~40% PPE and balanced out by 10% gearing + 15% funded by suppliers.
Business
- Total retail outlets in Spore has not changed much over the last 10years. But annual revenue/outlet has increased ~20% from 847k/outlet (FY14) to 1024k/outlet (FY23). And more importantly, non retail outlet revenue has increased many fold from ~1.1mil (FY14) to 8.8mil (FY23).
- The central kitchens that came online since FY18 seems to have boosted its subsequent years' GPM by 2-3% and look like a game changer for the business to continue to scale, especially to grow the non-retail portion of the business, whether is it food catering or supplying to its overseas franchisee.
- Unfortunately, while GPM and outlet sales efficiency have improved, SGA costs (% of GP) does not get lower (but higher) over the same comparison years used above. The headwinds of rental and manpower in Spore are permanent as everyone knows it.
- After spending huge amt. of CAPEX from FY13-18 (~7.4mil per year), the next 5 years (FY19-23) CAPEX was just ~1.4mil per year. As a result, annual depreciation topped out in FY20 and is on a steady declining trend. Since depreciation is >> CAPEX since FY19, abundant cash has been built up on the balance sheet.
Structure
- Everyone is eyeing the 85% cash on the BS, which has been slowly built up since they completed their CAPEX cycle in FY18. Before Covid (FY12-20), for every dollar that Chairman Han took in salary, he received another 1.6dollar in dividend. Unfortunately from FY21 onwards, it was the other way around - for every dollar of salary, it was 0.6dollar dividend. Did anything changed during Covid-19 to warrant this? Is there PPE expansion or acquisition of new F&B brands in the pipeline to warrant the use of cash?
- 2 special dividends were given in the past decade. The last special dividend was in FY16 due to 60year anniversary. How time flies as it will be their 70yr anniversary in ~2.5years time.....
Asset:
- Working capital: Inventory~11days, receivables~2days, payables~100days --> negative 87days (or close to 3 months) as for any retail facing business.
- 10% geared as of FY23. The debt are amortizing mortgages for its PPE invested between FY13-18. For context, peak gearing was ~40% back in FY18.
- In essence, the balance sheet is made up of ~85% cash, ~40% PPE and balanced out by 10% gearing + 15% funded by suppliers.
Business
- Total retail outlets in Spore has not changed much over the last 10years. But annual revenue/outlet has increased ~20% from 847k/outlet (FY14) to 1024k/outlet (FY23). And more importantly, non retail outlet revenue has increased many fold from ~1.1mil (FY14) to 8.8mil (FY23).
- The central kitchens that came online since FY18 seems to have boosted its subsequent years' GPM by 2-3% and look like a game changer for the business to continue to scale, especially to grow the non-retail portion of the business, whether is it food catering or supplying to its overseas franchisee.
- Unfortunately, while GPM and outlet sales efficiency have improved, SGA costs (% of GP) does not get lower (but higher) over the same comparison years used above. The headwinds of rental and manpower in Spore are permanent as everyone knows it.
- After spending huge amt. of CAPEX from FY13-18 (~7.4mil per year), the next 5 years (FY19-23) CAPEX was just ~1.4mil per year. As a result, annual depreciation topped out in FY20 and is on a steady declining trend. Since depreciation is >> CAPEX since FY19, abundant cash has been built up on the balance sheet.
Structure
- Everyone is eyeing the 85% cash on the BS, which has been slowly built up since they completed their CAPEX cycle in FY18. Before Covid (FY12-20), for every dollar that Chairman Han took in salary, he received another 1.6dollar in dividend. Unfortunately from FY21 onwards, it was the other way around - for every dollar of salary, it was 0.6dollar dividend. Did anything changed during Covid-19 to warrant this? Is there PPE expansion or acquisition of new F&B brands in the pipeline to warrant the use of cash?
- 2 special dividends were given in the past decade. The last special dividend was in FY16 due to 60year anniversary. How time flies as it will be their 70yr anniversary in ~2.5years time.....