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Wondering about QAF Limited (Updated).

Sunday, August 6, 2017

Pulled pork as Rivalea calls off IPO
The Australian, November 7, 2017
(See Comments section at the end of this blog.)


7 October 2017

Hi AK, thanks for the session (i.e. Evening with AK and friends). 

QAF has received shareholders approval to list it's primary production on the ASX. 

Since management has not indicated that the proceeds from listing will likely not translate to special dividend for shareholders, hopefully they can put the money to good use to expand their operations in the Philippines. 

Wonder when the share price will be appreciated by investors and truly appreciate upwards.

I dunno if the share price will move up or not. One off gains are one off. So, don't place too much emphasis on that. 

Although QAF has a good track record, we could see lower share price if the pork oversupply situation in Australia is prolonged and lasts for several quarters. Earnings will continue to suffer then.

Off the top of my head, in such a situation, we could see $1.00 - $1.10 a share then. 

As QAF should be able to maintain its dividend, I am staying invested and getting paid while waiting.

Reader #1:

I wonder if any of your readers have written to you recently about the longer term aspects of QAF- both in dividend yield and share price?

Reader #2:
Hi AK, I know you are an investor in QAF Limited. Any reason why the share price is plunging? I know a long time director just stepped down last year. Do you think that has an effect?

Singapore's Longest Sandwich

Don't ask me about share price. Ask Mr. Market. There is no way I can tell how prices might move now or in the future (with certainty). Past prices, I can tell you easily.

Dividend yield? That partly depends on share prices. Refer to what I said above. ;)

There will always be challenges in business. I will say that QAF's track record is a good one and I can only hope that they continue to bring home the bacon (and bread). ;p

Of course, QAF is not just about Gardenia bread although that is what most of us know them for. QAF is also in the business of pork production in Australia (i.e. Rivalea) which is doing very well. 

It was only a few years ago that Rivalea's viability was still a big question mark and some readers might remember that I blogged about it too. 

Now, Rivalea stands shoulder to shoulder with Gardenia in importance to QAF.

Of course, with the strategic review to improve value for shareholders still underway, it is difficult to say what will happen in future but it is reasonable to assume that any action taken will probably result in value being created.

The "worst" thing that could happen from the review is for QAF to maintain the status quo. To an investor for income, this is probably not really a bad thing but to a speculator, it could be.

Know our motivations as investors and know our investments. Then, we will know if the investments are appropriate for us.

If they are appropriate investments for me, I will stay invested. The day they are no longer able to do what I think they should do for me is when I would probably let them go. Time will tell.

Que sera sera.

Slides presentation on Rivalea:
HERE (published in June 2017) 

Related post:
How much is QAF worth?


AK71 said...

QAF 2Q17 profit after tax fell 72%.

AK71 said...

Pulled pork as Rivalea calls off IPO
The Australian, November 7, 2017

The curse of the failed float has hit again: pork producer Rivalea has pulled out from its planned initial public offering in another sign that equity capital markets remain under pressure.

The company owned by Singapore’s QAF had been using Morgans to prepare it to float next month. It had been expected to raise up to $100 million and was likely to be valued around $200m.

A non-deal roadshow was held in July and there was the expectation that QAF, a Singapore-listed food company, would keep 51 per cent of Rivalea once it was listed.

Rivalea has seven pig farms, 19 contracted farms, three feedmills, pork processing and two grain storage businesses.

Marketing of the float had been under way for the past few months and the hope was that prospective investors would be drawn to the operation on the back of popularity in the consumer sector.

Rivalea, previously part of Bunge in Australia, also owns Family Chef, Eggstra and Riverlea Australia.

The price expectations of the vendor, and its advisers, seemingly differed from the market and fund managers, which is why the float was shelved.

AK71 said...

john said...
Had the news affected your long term views of QAF?

Blogger AK said...
Well, fundamentally, the businesses are OK.

However, the oversupply of pork in Australia is an issue that will take some time to be digested. How long would it take? I don't know exactly, for sure, but it could take a few years.

So, I believe that weaker performance as a whole is to be expected.

This is something investors in QAF must be aware of and ready to accept.

Unknown said...

Posted some of my questions in another forum but was deleted.

Not sure if it is just me but after looking at their annual report there are something puzzling on their directors and board composition. Some questions for shareholders to think over

1. Both Tan Teck Huat and Dawn Pamela Lum were appointed on 12 February 2016. Tan Teck Huat subsequently became executive finance director of QAF, and Dawn Pamela Lum became lead independent director in January 2018. Both of them previously worked in the same company, GuoccoLand for over 5 years.

How did the NC ensure that there is real independence given past working relationship of Tan and Dawn?
The rule 720(6) disclosure released by QAF on 26 March 2019 did not disclose the date of appointment of Tan Teck Huat. Not something on purpose I presume?

2. Dawn Pamela Lum is the chairman of Remuneration Committee. Tan Teck Huat is a member of exco.

Does Dawn participate in the deliberation of the remuneration of Tan Teck Huat? Not sure what is the process involved here. Who came out with the amount payable to Tan? Was it Tan that recommend his own pay for Dawn to approve?

How then did the Remuneration Committee arrive at the amount of director’s fees? Did the management involve in the process of making recommendation on the amount of director’s fees to the Remuneration Committee? Tan Teck Huat is part of management I presume.

3. Goh Kian Hwee (the Joint Group Managing Director) and Ong Wui Leng Linda (independent director who is also the chairman of Audit Committee), both sit/sat on the board of another listed company, Hwa Hong Corporation Ltd.

Was Linda identified and recommended by Goh to the board of QAF? What steps were taken by the NC to ensure Linda is independent if she was recommended by Goh to the board of QAF?

4. Goh Kian Hwee was from a law background, with experience in corporate and capital markets law. He was previously a director of other listed companies in Singapore.

Does he even have any background or experience at all in managing business other than in law? If not, was there any assessment done by the NC to conclude that his qualification, background and experience in law can fit in the role of the managing director (who is supposed to direct and manage the business of QAF)?

5. There are 2 Joint Group Managing Directors, Lin Kejian and Goh Kian Hwee. Goh Kian Hwee received between $2 million to $3 million in FY2017 and FY2018. Lin Kejian elected not to receive remuneration. An article published in Business Times dated 16 Mar 2019 mentioned that CEOs of large companies had a median remuneration of $3.41 million in 2016, whilst medium-sized company CEOs were paid $1.25 million.

Are both Lin Kejian and Goh Kian Hwee subject to a fixed contract term as the Joint Group Managing Director of QAF? Is there a fixed remuneration to be paid to Goh Kian Hwee’s during the term of his contract?

If there is no fixed remuneration for Goh during his contract term, does the Remuneration Committee assess and determine annually as to the remuneration of Goh? How did the Remuneration Committee assess and determine the remuneration package of Goh?

Is that remuneration package in line with market practice for a candidate with no prior experience? Were there any studies done in determining the remuneration package of Goh Kian Hwee? Is he overpaid as Joint Group Managing Director of QAF?

Unknown said...

6. The performance of QAF appears to be declining since 1 January 2017 due to various factors. On page 72 of QAF 2018 Annual Report, it was disclosed that the remuneration committee determined the remuneration packages of executive directors based on various factors including individual performance and contribution.

What has the management team achieved so far in the past 2 years since they came in 1 Jan 2017 in terms of growing the business of QAF? If the performance of QAF continues to decline over the next few years, will Goh’s remuneration still remain in the band of $2 million to $3 million?

Given the fact that Goh and Tan are receiving remuneration as executive director of QAF, what have both of them achieved in the past 2 years to achieve long-term sustainable growth and value creation (as disclosed in their annual report page 72)? What have both of them achieved so far for the Remuneration Committee to determine and conclude they deserved to be paid so much?

7. 2016 annual report and earlier annual reports disclosed that the CEOs of subsidiaries as key management staff. Past 2 years, these CEOs information were no longer disclosed in the report. I thought this disclosure is required after looking at other listed companies annual report. Dont think it is fear of competitor poaching as competitors can find out from announcement or past annual reports anyway. Maybe these subsidiaries CEOs no longer considered to be key management staff anymore?

8. On page 67 of 2018 Annual Report, it was disclosed that 4 non-executive directors elected not to receive director’s fees.

Why these directors elected to do so? Was it because of the declining performance?

If it is due to declining performance, how did the Remuneration Committee then come to a conclusion to recommend the such attractive remuneration packages for Goh Kian Hwee and Tan Teck Huat? Didnt the Remuneration Committee take into account the declining performance of the Group when assessing their remuneration package?

9. On page 85 of 2018 Annual Report, QAF said that it encourages shareholders to regularly communicate with the company through the designated email address of QAF at The email address is not even valid for me to reach out. What is the correct email??

QAF AGM is coming and I will definitely be raising most if not all of these questions to the board in their AGM.

AK71 said...

Hi Unknown,

Hope you got the answers you were looking for at the AGM.

When in doubt, it is best to stay out. ;)

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