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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

Reader:
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.




AK:
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

AK:
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?

3 comments:

AK71 said...

See:
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.

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