Decoding YKGI's FY2025 Earnings: Yew Kee Duck Rice, CHICHA San Chen Bubble Tea and Food Court Landlord

 Recently DBS Group Research initiated coverage on Kimly Ltd, highlighting its investment thesis as a defensive F&B play with growth potential. This made me feel like writing about another small, defensive F&B position in my portfolio: YKGI Limited (the folks behind Yew Kee Duck Rice, CHICHA San Chen, and My Kampung food courts).

YKGI dropped their FY2025 full-year results in February 2026. On the surface, the headline numbers might look like a mixed bag. But when we dig into the cash flow and shareholder returns, I tried to piece together a clearer picture and develop my own investment thesis for this company.  

Full disclaimer that this is a penny stock with low liquidity. The bid-ask spread itself can be larger than 10% of the share price. Low liquidity means that if you ever need an exit, there could be no willing buyers around. I am keenly aware of this as a shareholder, and the position takes up less than 0.5% of my Dividend Investment portfolio to reflect this high uncertainty and high risk nature of my investment.

Top Line Growth Against a Bottom Line Squeeze

If you only glance at the net profit, you might be a bit spooked. YKGI’s net profit attributable to equity holders fell 19.5% year-on-year to S$3.84 million. However, the top-line revenue tells a different story of ongoing business expansion:

• Total Revenue: Grew 6.6% to S$70.14 million.
• F&B Operations: Revenue increased to S$33.82 million, driven by new outlets.
• Franchise Business (CHICHA San Chen): A highly profitable segment, bringing in S$24.95 million, boosted by new outlet openings in Macau.
• Food Court Business: Grew to S$11.37 million, supported by existing foot traffic and the opening of a brand new food court at Suntec City.

Why exactly did profits fall, when YKGI is selling more duck rice and bubble tea than ever? The profit squeeze came down to two primary, very understandable factors:

1. Labour Crunch: Employee benefits rose 8.5% to S$18.77 million. In a structurally tight local labor market, YKGI simply had to pay more to attract and retain the staff needed to run their expanding network of stalls and stores.
2. Expansion Costs (Depreciation): Depreciation of property, plant, and equipment surged 22.7% to S$11.65 million. When you open a new food court in a prime location like Suntec City or expand franchises into Macau, you have to recognize the depreciation of those new leases (Right-of-Use assets) and physical renovations.

In short, YKGI took a hit to their accounting profits because they are actively spending money to physically expand their footprint.

Is This Comparable To Kimly?

Yes and No. They are definitely in the same arena of F&B, but they are playing different games.

Both are local, heartland-focused F&B operators. Both run a dual-engine model where they lease out stalls for rental income while operating their own F&B brands within those spaces (like YKGI's Yew Kee Duck Rice). Both utilize central kitchens to control costs and maintain quality. YKGI operates a total of 5 food courts in Singapore, including its newest food court at Suntec City Mall which commenced operations in August 2025.

YKGI is much smaller and younger (only listed in 2023) compared to Kimly, which operates at an entirely different scale. Furthermore, Kimly relies almost entirely on traditional mass-market food. YKGI on the other hand, has some premium branding with its CHICHA San Chen bubble tea franchise.

Defensive Balance Sheet

YKGI’s balance sheet ticked some of my boxes and played a part in my decision to bite the bullet and buy some shares. 

They are sitting on S$21.4 million in cash and bank balances. To put that into perspective, their cash alone accounts for nearly 30% of their entire total asset base (S$71.39 million). YKGI maintains minimal bank borrowings of just S$2.2 million, putting them in a strong net cash position of S$19.2 million. 

While total liabilities stand at S$51.5 million, the bulk consists of lease liabilities (S$38.9 million), reflecting long-term rental commitments under accounting standards rather than traditional financial debt. That said, these remain fixed obligations tied to outlet operations and should not be ignored when assessing financial risk. 

On the liquidity front, current assets of S$27.4 million exceed current liabilities of S$20.7 million, with cash alone covering near-term obligations. This suggests adequate short-term financial flexibility, although part of these liabilities relates to recurring lease payments inherent to the business model. 

Tight Cash Flow

Despite the accounting drop in profit, the Group generated a healthy S$17.37 million in net cash from operating activities. 

However, after accounting for capital expenditure, lease payments and shareholder returns, this translated into a net increase in cash of just S$117,000. This suggests that while the underlying business remains cash generative, most of that cash is currently being reinvested back into expansion.

If the new Suntec City food court or the Macau franchises do not become meaningfully profitable soon, or if future rental costs rise as leases are renewed or new outlets are added, there could be limited buffer to sustain the current dividend payout without drawing down on their S$21.4 million cash reserves.

YKGI declared a final dividend of 0.36 Singapore cents per share. Added to the interim dividend, the total FY2025 payout is 0.72 cents per share, increasing from the 0.62 cents paid out in FY2024.

During the year, the company utilized S$506,000 to buy back 3.8 million shares from the open market. While modest in size, the buyback suggests management may view current prices as reasonable.

Because they have so much cash and almost zero bank debt, they aren't suffocating under high interest rates like highly leveraged REITs or property developers. They are self-funding their expansions into Suntec City and Macau using cash flow, with some left over to pay you a dividend.

My Verdict: A Cash Generator With Caveats

Smaller F&B operators like YKGI still operate in an inherently challenging environment. They are fighting in the trenches every day against wage inflation, a structurally tight labor market, and rising utility costs. While YKGI is executing well right now, the margin for error in the restaurant business is inherently razor-thin.. 

I am sharing this small due diligence not to pump a stock, but to spark a discussion and pull back the curtain on the variety of choices available on the Singapore Exchange. Once again, this position is less than 0.5% of my overall portfolio and my sizing is likely to remain small due to the high uncertainty and high risk nature of this investment in comparison to well-established blue chips. 

Building a resilient portfolio doesn't mean you can only look at the Straits Times Index top 30. There are fascinating, cash-flowing businesses operating right in our heartlands, and YKGI happens to be one of them. 

What are some under-the-radar counters you’ve been looking at recently? Let me know in the comments. All Huat !!

Disclaimer: This article represents my personal views and portfolio actions. It is not financial advice. Please do your own due diligence before investing.