Friday, July 5, 2013

Company in focus - Select Group

Select group is a leading food service provider in Singapore. They started out with catering as their main business and branching out over the years to include restaurants, fast food chains, desert chains, F&B management services, event catering etc.

Below shows the select group of companies under them:

This company caught my attention as their financials reflect positively on their management capabilities. Some of their brands are quite successful and i'll describe my experiences of what i think of them.

Firstly, Texas Chicken is a well known brand in Singapore now. When they first started out, i was sceptical that they could survive with KFC and Popeyes already in Singapore. Later on, i've been hearing my colleagues, friends and relatives talk about texas chicken. The comments were good and most of them were saying texas chicken sells better chicken than KFC. It was then i decided to try it out and it was unbelievable. Their chicken were different from KFC indeed. More juicy inside and even their breast meat was not so dry. Even my foreigner friends were commenting positively on Texas chicken too. Indeed if you look into their financials, Texas chicken has seen an increase in revenue from 8.131 Million in 2011 to 11.094 Million in 2012.

Secondly, they have Stamford as their catering business. This caterer name i've seen a few times before and i realised my company has been engaging their services for many of our events. I remembered during my army days, SAF also engages Stamford catering. With big institutions as their clients, their business is relatively stable.

Thirdly, they have this restaurant called Peach Garden. This is the restaurant that contributes most to their revenues. Peach Garden made up 30% of their revenue in 2012.  I've not been to this restaurant before but have heard people saying about it. They specialise in Chinese fine dining.

Now moving on to their financials.

Income statement
Currency in Millions in SGD 2009 2010 2011 2012
Revenue 61.6 75.5 101.5 116
Net Income 0.3 -1.7 3.2 4.2

Balance Sheet
Cash and Equivalents 8.1 6.7 6.6 12.5
Long Term Debt 2.4 3.2 0.6 1.6

Cash flow
Cash from operations 4.2 6.5 8.8 17.3
Capital Expenditure -5.9 -9.8 -4.4 -7.1

Revenue and Income has been increasing consistently for the past 4 years. Their balance sheet is healthy with strong cash and low debt. Cash flow has been increasing consistently also. If you look at some of the financial ratios, it is quite promising for the company.

Return on Equity: 25.03%
Return on Assets: 6.28%

PER is at 13.4x which is lower compared to similar companies like breadtalk (PER 21.5x) and Old Chang Kee (PER 15.4x)

Dividend yield is fairly attractive at 6.41% at the current price of 0.39. 

I have bought some shares of this company as of this week. I think their management have been actively expanding the business and it is good for the group. They are also planning to introduce two new culinary offers this year and expand each of their businesses to 20 or more outlets. 

Its share price has risen from 0.35 to the highest of 0.40 and closing at 0.39 today. This is about 10% increase this week. 

For more information on thier business, you can visit their website:

*Please read disclaimer at the bottom of this blog*
*All financial information adapted from and Select group annual report 2012. 
*Picture adapted from Select Group corporate website.


  1. Texas Chicken was in Singapore before KFC. Ask your parents or grand-parents. LOL!

    1. Hi CreateWealth8888,

      Yup, I heard of it before. My parents couldn't remember about texas chicken when I told them it was here in SG in the 70s and 80s. Probably they were too poor to have fast food at that time. I heard of it from some of my older colleagues.

    2. Hi,

      My 1st post on your blog. I notice that food stocks have been performing well so far this year. I have sold off my holding in SUPER grp and Old Chang Kee recently to cash in on profit.

      How did this company catches your attention? U read it somewhere?

      This a good post & analysis and keep up the good work in blogging :)

    3. Hi Solace,

      I have been researching on companies these few weeks and happen to see this company. Some of their brands caught my attention and I realised they have been sending brochures to my house all along.

      Thanks for your kind words. I will keep on blogging and sharing the little things I know. :)

  2. You are on to something here. Thanks for the heads up. ;)

    1. Hi AK71,

      Just sharing what i know only. Hope its useful. :)

  3. Do you think their annual dividend of $0.025 is sustainable ?

    1. Hi betta man,

      That I'm not sure. If their profits continue to increase, the likelihood of increasing dividends will be higher. But then again. Its up to the management of the company to decide. I'm into it more for the growth then the dividends. If the company continues to grow, its better for shareholder's value.

  4. Would you like to exchange links?
    My url is:

    1. Hi value investor,

      Sure, I've added your link to my blog. Do add mine to yours too.

  5. Hi SG Young Investment,

    What do you think of Select Group's HY2013 results ?

  6. Hi betta man,

    Their revenue increased but net profit decreased. This is due to a one time loss of 0.31 million on disposal of fixed assets. Other increased cost are manpower, food and raw materials. Cash flow also decreased as trade payables increased. I do not know why many of their clients are owing them money. If they pay up, cash flow should be healthy.

    Select group is still expanding their business thus it'll take some time before their net profit increase significantly. They are also building a new HQ with their offices and central kitchen located in one place. This will help keep their cost down as they improve productivity. I will have to see their next business expansion plans to know whether they are still a good company.

    Nonetheless, the recent financial statement is positive on revenue growth. I hope they can keep cost down and improve their net margins. That will be the number I'll be looking at in their next statement.

  7. final dividends slumped to 0.2 cents for FY2013, as compared to 2 cents in FY2012. What are your thoughts on that ?

    1. Hi betta man,

      I've looked through their financial results. The tight labour market certainly impacted their profits. The disappointing result was from its Texas chicken which chalk up a loss. The main cause of their decreased profits was however due to more money being spent on R&D. They are still embarking on a few other F&B concepts and its china town food street just recently opened again after renovation works.

      To realise more profits, they'll probably need more time to strengthen operations and manage their cost. I hope they do something to their loss making texas chicken soon.

  8. According to the investor relationship of Select Group, they are building a new HQ at Senoko and hence decided to give out less dividend. They have plans to explore overseas. It's share price has hit a new low of $0.32. Is it worthwide to average down ?

    1. Hi betta man,

      This I won't be able to answer you. Investing in this company will need a long time before profits can be realised. Building the new HQ will improve its profit margins. If they venture out overseas successfully, then it will boost up their profits. At this point in time, there are still many uncertainties. I'll not be adding to my position and remain status quo now.