Back then, I thought the company was good and easy to understand, relatively cash rich, easy to understand business model and conservative management. 4 years later, I will be doing a quick analysis of the company in 5 ways, which are Profit analysis/ Cash flow analysis/ Balance Sheet analysis/ shareholder analysis and Walkaround analysis.
Profit analysis
The net profit is not very fantastic. Don’t be fooled by the high gross profit margin as it does not take into account the rental that they have to pay for their shops. The profit margin for FY 2021 is great ! But revenue is very flat-tish.
Cashflow analysis
This is where the company shines, for every dollar of revenue, 3-5 cents goes to paying out their dividend and 38 cents goes into operating cash flow. I can't find a better company that has such good cash management.
Balance sheet analysis
The balance sheet is very boring, it has no Accounts receivables to speak off, DPS is very flatish as revenue is not growing much FRS 116 on leases has a huge distortion effect on its balance sheet as lease liabilities now have to be recognised in their books, however, strip that treatment apart, and you will find that the Company is a net cash company. The company doesn’t need to take loans to expand their business which is damn good IMHO.
Shareholder analysis
Again very boring with 78% of the shares being held by insiders, this means share price doesn’t move much, and management has incentive to grow the company, though I think they would rather sit down and reap dividend from the cash instead.
Walkaround analysis
I still have no idea how does the company generates its revenue and profits, the outlets that I go to are not packed and am always able to get a seat. The food is not very fantastic , but they have an amazing membership program. Important thing to note is that the company recognises its membership rebates points as a liability in their books which is very conservative management.(which listed company do you see that recognises the vouchers it gives out as a liability?) The staff are friendly and most have been there for a long time, the company I feel in general treasures its staff and shareholders!
Closing thought
I wish the company can expand their presence in Singapore either thru absorbing one of the other companies or grabbing more business in South East Asia but I think the management does not want to dilute their shareholdings for now .But for now, I will still continue holding my shares.
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