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Choo Chiang Holdings

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Boring Business

A 30 years old home grown retailer and distributor of electronics and electrical accessories. Listed in July 2015, the company has 10 retail outlets representing more than 30 third-party and proprietary brands. The  company also own 12 investment properties for rental income and 4 other properties for retail / warehousing operations. 

Products includes cables, lighting protection, electrical circuit protection, wiring accessories, power tools, fans, luminaries, lamps & accessories. 

 

Singapore is the firms main market with 99% revenue coming from Distribution and 1% from property investment. 

Business is boring but with steady profits. 

Business Performance

Between 2014~2019, revenue had been mediocre with stable profits. 

2020 results is due to Covid-19. The spike up in revenue from 2021 was due to reopening of the local economy after having vaccinated most of the population against the virus. With reopening, construction and renovation activities picked up. Tight supply also led to higher prices, hence the uptick in profit and margin. 

Contribution from Property Investment is negligible but the potential is there for the company to convert these $12.5M investment into cash. 

Business outlook expected to remained positive, particularly with the increase in public housing projects to rein-in elevated property prices. 

Balance sheet is very healthy with cash of $26M, investment asset of $12M and total liabilities of $17M. 

Opinion 

A small Singapore property market limits the company potential to scale. Expanding to neighbouring is an option but that would mean competing against established players. 

Dividend yield of 6% is attractive for those who love boring business that provide steady income stream. 

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