QAF

[namaste]

since i used a few of their products, i decided to spend some time to look into the financials and valuations of this company.

I usually like to see 5 year financials displayed at the front of AR - but there was none to be found for QAF' 2009 AR. Sianz - after i tabulated the annual Rev and NM from each years' FY financials; i propabably understand why they are not displaying it.

figures in $M SGD
2005 886 Rev 11.4 NM 3.5c eps
2006 993 Rev 19.5 NM 4.8c eps
2007 1077 Rev 14.1 NM 1.0c eps
2008 840 Rev -29.2 NM -7.8c eps --> big lost as ichew has pointed out
2009 855 Rev 59.3 NM 12.1c eps --> what happened here ? big jump in profits.

2010 YTD (3Q)
620 Rev 39 NM 7c eps

Does not good track record; performance from 2005 to 2008 was lacklusture. I am interested to find out what contributed to the big turn around in 2009 and seems to be able to be sustained in 2010. Probably when i get some time during the christmas break.

[mrEngineer]

Not as good as rice though as the glycemic value is much higher as follows:-

Whole meal rye bread = 58
White bread = 70
Whole wheat bread = 77
White rice = 44

One of the reasons could be that bread is wholly processed food whereas rice is only mildly processed (dehusking).
Cheers to good health.

My impression is that white rice has higher GI than most bread. May I know where did you get your source?

I doubled check on a random source but white rice still seems slightly high on GI.
http://www.the-gi-diet.org/lowgifoods/

[edragon]

The data is from this link: http://www.lowglycemicdiet.com/gifoodlist.html

There is a very big difference between Instant White rice being 87 and Long grain White rice (44) which we usually consume after boiling.
I suppose "Instant" is a processed food in powder form like Instant milk powder.
Go for natural foods as much as possible as opposed to "processed" foods as the breaking down of the structure of the grains by machines is not food for the GI.

[namaste]

Spend some time to dig into more details of this company and its valuation during the Christmas break.

eps for 3Q is at 7c and using 2.4c (same as last year). Total eps for FY 2010 is likely to be 9.4c.
PE (at current price of 62c) = 6.6. This is undemanding for a stock with market cap of 300M.

Besides an undemanding valuation, the catalyst for this stock is the potential spin-off of its . . . .. (extract of 2009 AR)

"In order to bring value to shareholders, management is evaluating the restructuring of the Group’s businesses through a proposed spin-off of its Primary Production segment held under Hamsdale International Pte Ltd (‘Hamsdale’). The Company is currently working towards a separate listing of Hamsdale on the SGX-ST. However, the proposed spin-off is subject to various conditions and approvals, including the
approval of the shareholders of the Company."


Based on 2009 AR, the following are the revenue contribution from each country:

Percentage Revenue (2009)
Singapore 21% 177.929M
Malaysia 28% 239.011M
Australia 41% 351.822M
Philippines 9% 74.170M
Others 1% 12.050M

The Australia business is a large parts of QAF's revenue (41%); so a spin-off would contribute a substantial amount to QAF as a one-off gain.

[mikh]

Having been a loyal QAF wholemeal bread supporter for many years, I recently decided to try Fairprice's wholemeal. At $1.65 + 80gm extra vs $2.35, it sounded like a good deal. I have no complaints about the quality and thought it provided the same benefits. Even if i cant finish the extra 80gm, i am still paying less. Not enough product differentiation and value from QAF in this instance. My dollar speaks louder and reckon i am stupid to continue with Gardernia.

[jovialger]

This seems to be a relatively undiscovered stock, so I shall quickly just give a brief overview and update of the latest 2Q results.

QAF owns bakery operations in Singapore, Malaysia, Philippines as well as Australia. This includes well-known brands like Gardenia, Bon Jour. It owns the largest bakery operation in SEA. It also owns Rivalea in Australia, which is the largest pork producer in Australia and accounts for 20% of Australia's meat production.

In addition, it is also the owner of 2 SUPERBRANDs "Cowhead" and "Farmland".

Over the past 2 years, it has successfully restructured its operations and diluted/sold its unprofitable and non core operations. A quick comparison of 2008 and 2010 results would reveal just a 0.2% growth in sales but a whopping 8x growth in operating profits! This can be attributed to the continued growth of its 2 core businesses - bakery and primary production, and with improved margins from economies of scale. It has started generating free cash flows since 2008 and has reduced its debt levels significantly these past years.

1H2011 sales further grew by 17% yoy, with OP and profit before tax growth of 24% and 35% yoy respectively. New bakery facilities have recently come into operation from 2Q2011 and 2H 2011 sales are expected to be higher than 1H2011.

An interim div of 1 cent has just been declared (1.6% yield), and at current price, this stock (with 2 superbrand products and large scale bakery/primary production operations) is just trading at 6x FY2010 PER and offers more than 6% div yield for 2010.

I am hoping for the day that Mr Market would accord it its fair valuation, and meanwhile, getting paid 6% yield annually while waiting patiently ...

(Vested)

[Big Toe]

Yes. QAF belongs to consumer staples. Tend to have pretty stable revenue profits(bearing unforeseen events)
Listed for the longest time and longest track record for any listed spore company.

With that being said, it is not as attractive now as compared to say, about 2 yrs ago when it was 40+ cents.
Upside potential? yes. Attractive investment? yes. Deal of the decade? no, you have missed it.

And finally on super brands, it's just plain cr*p. These super brand logo is being paid for.
Your company pays a certain amount, your products is now a super brand. To think
companies actually is naive enough to pay for it. Bad bad allocation of financial resources. If your brand is successful, there is no need to boast about it, it speaks for itself. Apple did not tout itself as a super brand, did they?

[RBM]

I can fully endorse what Big Toe states regarding "Superbrands". I was running a business in Malaysia five years ago and all that business needed to do in order to become a "Superbrand" ......... was to handover a cheque for RM 15,000! My response was two words, the second of which was "off".

[edragon]

I can fully endorse what Big Toe states regarding "Superbrands". I was running a business in Malaysia five years ago and all that business needed to do in order to become a "Superbrand" ......... was to handover a cheque for RM 15,000! My response was two words, the second of which was "off".

So, I guess the 1st should be Fxxk.

[jovialger]

Thanks for highlighting the Superbrands status, though they do also have a wide range of products and brands under their group. I still believe the improvement of their core operations and results of their restructuring have not been uncovered or appreciated, as these efforts are masked if you look at their past few years' track records in top line growth (which is negligible).

I do not view this as the deal of the century, but I think there is value with share px still trading at this level since 2010 despite a better financial position and no more loss-making affiliates draining the group, and still tapping on emerging market consumption growth.