Public Announcement: This will be the last article covering QAF Limited (“QAF”) till further notice. The reason is due to its relatively small market capitalization, which may in turn lead to speculation and manipulation. Furthermore, investors with large stakes may find it difficult to exit their position given the relatively low liquidity.
On 21 February 2025, QAF announced their full year result for FY2024. This financial year, QAF has generated sufficient earnings per share to pay the dividend, which has allowed it to increase its net asset value. With its currently strong financial position, this may provide a strong foundation for it to navigate the uncertainties in the market.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Full Yearly Results
Financial Highlights
Revenue
| Metrics | Current | Previous |
|---|---|---|
| Revenue | +1.0% | +3.0% |
| Rating | Favorable | Favorable |
Revenue for FY2024 increased by 1.0% to SGD636 million from SGD628 million for the previous financial year. This metric is Favorable aspect of the dividend stock.
Earnings per share
| Metrics | Current | Previous |
|---|---|---|
| Earnings per share | +25.0% | +144.4% |
| Rating | Favorable | Favorable |
The Basic and Diluted earnings per share for FY2024 increased impressively by 25.0% to SGD0.060 per share as compared to SGD0.048 per share in the previous financial year. This metric remains Favorable and is a good aspect of the dividend stock.
Operating Cash Flows
| Metrics | Current | Previous |
|---|---|---|
| Operating Cash Flows | +13.3% | +17.6% |
| Rating | Favorable | Favorable |
Net cash generated from operating cash flows for FY2024 increased by 13.3% to SGD65 million from SGD57 million in the previous financial year. The improvement in operating cash flows were mainly due to better collections of trade and other receivables. The metric remains Favorable.
With an expected dividend paid of SGD28.8 million based on SGD0.05 per share, the cash flow generated for FY2024 is sufficient to payout the dividends.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing ratio | 24.6% | 24.0% |
| Rating | Favorable | Favorable |
Gearing ratio stands at 24.6% as of 31 December 2024. This metric is computed using total assets of SGD664 million and total liabilities of SGD163 million. The metrics remain Favorable as QAF is less reliant on external sources to fund operations. With the profitable operations, this can be lowered further in the near future.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest coverage | 23.2x | 16.3x |
| Rating | Favorable | Favorable |
The interest coverage stands at 23.2 times as of 31 December 2024, using profit before tax of SGD44.6 million and finance costs of SGD2.0 million. The high interest coverage ratio is due to the Group have very minimal borrowings compared to their total assets. The metric is Favorable.
Price-to-book ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 0.97 | 0.98 |
| Rating | Favorable | Favorable |
The Price-to-book (“P/B”) ratio for QAF is 0.97. This is computed using the Net Asset Value (“NAV”) per share of the Group as of 31 December 2024 of SGD0.869 per share and the closing share price of SGD0.845 as of 27 February 2025. This is Favorable as it translates to paying a small discount for QAF business.
On another note, worth noting that with cash and cash equivalents of SGD209 million and total borrowings of SGD11.6 million, at total ordinary shares of 575 million this represents net cash of SGD0.34 per share.
As of 27 February 2025, the Market Capitalization is approximately SGD486 million.
Website: Yahoo Finance: QAF Limited (Q01.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2024 | 5.92% | SGD 0.050 |
| 2023 | 5.92% | SGD 0.050 |
| 2022 | 8.28% | SGD 0.070 |
| 2021 | 5.92% | SGD 0.050 |
| 2020 | 5.92% | SGD 0.050 |
| 2019 | 5.92% | SGD 0.050 |
With the exception of 2022 where there was a special dividend payout of SGD0.020 per share from the disposal of their poultry business, QAF have been paying out consistent dividend of SGD0.050 per share throughout the years since 2012.
With a closing share price of SGD0.845 as of 27 February 2025, this translates to a recurring dividend yield of 5.92%. For my benchmark, a general reasonable yield would be around 5.25%. The dividend yield is thus Favorable and comparable with Real Estate Investment Trusts (“REITs”) whose mandates are to distribute majority of their earnings as dividends.
Website: Reasonable Dividend Yield 2025Q1 – 5.25%
Although the earnings per share is sufficient in FY2024, it was worth noting however that the dividend payout has been more than their earnings per share throughout history. This is made possible given that amortization and depreciation expense, which is a non-cash expense.
Adjusting the net profit into net profit before amortization and depreciation would result in the adjusted earnings per share of SGD0.124 per share for FY2024, which will be sufficient to maintain the dividend payout. Computation as below.
| Description | Amount |
|---|---|
| Profit after tax from continuing operations | SGD 44,635,000 |
| Amortization and depreciation adjustment | SGD 26,661,000 |
| Adjusted net profit | SGD 71,296,000 |
| Number of shares | 575,268,440 |
| Adjusted earnings per share | SGD 0.124 per share |
The issue with this, however, is management signaling that there is not much capital expenditure required to replace their assets. Annual repair and maintenance will be sufficient to maintain their assets, which is cheaper than purchasing a new asset. Investors will need to take note if they are comfortable with the idea that their assets are able to last longer than the pre-determined useful lives as at reporting date.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Revenue | +1.0% | Favorable |
| Earnings per share | +25.0% | Favorable |
| Operating Cash Flows | +13.3% | Favorable |
| Gearing ratio | 24.6% | Favorable |
| Interest coverage | 23.2x | Favorable |
| Price to Book Ratio | 0.97 | Favorable |
| Overall | Favorable |
In conclusion, QAF remains in a Favorable position. There remains a strong buffer for their operations and dividend payouts. The stock is a good option for those considering adding for its long-term sustainable dividend yield.
Background
QAF is a leading multi-industry food company with core businesses in Bakery and Distribution and Warehousing. QAF have an extensive operations and distribution network in the Asia-Pacific region including Singapore, Malaysia, the Philippines, Australia, Myanmar, Thailand, Cambodia, Hong Kong, Taiwan, Macau and Brunei. The Group, together with their joint venture in Malaysia, currently employs over 9,000 employees. They are listed on the Singapore Exchange Securities Trading Limited.
The bakery operations cover Singapore, Malaysia, the Philippines and Australia. They produce branded packaged bread and unpackaged bread, as well as a wide range of frozen and par-baked specialty French-style breads and pastries.
The distribution and warehousing business in Singapore remain one of their core businesses. They are a leading importer and distributor of a wide range of international food brands, including their very own Cowhead, Farmland, Haton, Orchard Fresh and Spices of the Orient proprietary brands.
Brands under their wing includes:
- Gardenia, the leading packaged bread brand in Singapore, the Philippines and Malaysia.
- Bakers Maison, a French-style bread specialist manufacturer in Australia that produces par and full-baked frozen bread, pastries and sweets.
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Website: QAF Limited (SGX: Q01): 2024 Half Year Result
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