QAF Ltd

Introduction to QAF
QAF Limited is a leading multi-industry food company listed in Singapore. Its core businesses are bakery, primary production, trading and logistics. 

The QAF Group has an extensive network of operations across the Asia-Pacific region including Singapore, Malaysia, the Philippines, Australia and China.

The principal activities are:

Bakery Operations: 

QAF manufacture and distribute packaged loaf bread, pastries and bakery products in Singapore, Malaysia, the Philippines, Australia and China.

Pork production, processing and distribution 
QAF is the largest producer of pork meat in Australia.

Feedmilling 
The feed mills in Australia manufacture pelleted stockfeed for a broad range of livestock.

Food trading and distribution 
QAF imports and distribute a wide range of liquor and food products.

Food manufacturing 
QAF produces own proprietary brands of food and beverage products.

Warehousing and logistics operations 
QAF operates a comprehensive logistics operation including warehousing and distribution.


Key Brands



Management
Tan Kong King is the Group Managing Director, he has worked for a number of years with an international accounting firm before joining QAF in his current role. In 1996, he streamlined and refocussed the QAF group's business expanding in existing bakery segment, disposing of non-food related operations. He is not related to the Chariman Mr Didi Dawis. The day to day management of the Group is through Mr Tan and assisted by Deputy Group Managing Director and other executives.

In 2015, Mr Tan is drawing a salary of about 2m. 

The directors' fees are nominal and interestingly none of the immediate family member's remuneration exceeds $50,000 for the year 2015. They own shares of the company and are remunerated through dividends. Their interest is aligned with shareholders.

High-level Financial Reviews

From Thomson Reuters, it shows that net profit margin for Sep 16 increases to 8.98% compared to 2015 5.48%. Return on equity increases from 12.52% to 16.7% in Sep 16. Price to Cash Flow is 6.85 and is lower than 15.57%. Long Term Debt to Equity Ratio is very low at 7.6. Receivable Turnover is excellent at 10.06 compared to the industry norm of 29.09.


Net Income is a constant upward trend. Gross Profit is a constant upward trend. (In future, I will show a graph, I am going out in a while to visit my friends for CNY). 

Retained earnings are increasing steadily over the years.

The Free Cash Flow is still positive over the years and constantly paying down the debts.

The dividend history has been consistently rising since 2008. 

Conclusion

I will not provide my estimated price for the company. Definitely, this company is added into my watch list. When the opportunity comes, I will acquire shares of this company.

Q1 2017 strategy

Today the company which underwent the acquisition of the Australian company had declared a special dividend of $5/share. I am holding to 10 lots of this company and I am going to use the dividend income of about $50,000 to acquire about 1 lot of another company M. The money should come in around end February.

I have a stock which is a trust and it should issue an estimated dividend of $0.18/share. I own a total of 380 lots which will give me about dividend income of about $68,400. The money should come end of March. This will allow me to acquire 2 lots of company M. 

Company M is giving out a special dividend of $2.20/share this year and the final dividend should be about $0.8/share. I currently hold 7 lots of this company M. With the additional dividend income, I will increase my holding to 10 lots. With 10 lots, I will be entitled to additional $30,000. By end May, the first company will issue $2/share for final dividend. This will generate $20,000. I will use the total dividend of $50,000 and some additional cash in May to boost my holdings in company M by an additional 2 lots to 12 lots.

Total dividend gain from this strategy will be 168,400.

24/2/2017
Company M price has gone up. This will affect my "ideal" strategy.

Less is More

Less might actually be more.

https://www.ted.com/talks/graham_hill_less_stuff_more_happiness/transcript?language=en

Uncluttering
We are in this world drowning with possessions, we keep buying and accumulating more stuff. We do not have the opportunity to discard our things. Early this year 2017, we start to segregate some of the unwanted clothes. We took stock of my wife's bags and we decided that we need to let go of those that she does not need. 

Please support by helping us to buy some of the stuff, visit here:
https://sg.carousell.com/uniquehkcollections 


I am guilty of buying too many books and have more than thousands of ebooks in my hard disk. There is no way I will finish reading them in my lifetime. I am hoarding them like the drake hoarding the gold in the Hobbit movie. 

We are currently living in a 1550 sqft Executive Apartment HDB and this gives us the room to buy more stuff. We need to constantly remind ourselves not to buy unnecessary stuff to clutter the house. 

Maybe in ten years time, we should move to a smaller HDB flat and design the house as a minimalist concept. 

Benefits

• By donating your stuff to Salvation Army or charities will help others who need them more than you. 
• It helps to free up your cupboards and shelves.
• It provides free cash to accumulate more financial assets
• With lesser things in life, you will feel happier
• While rearranging our stuff, it helps to look at each of our possessions and force us to evaluate them. It helps us to question our passion, values and what is more important in our lives.
• It rearrange our lives.

Removing things from our house helps us to desire less and work towards real freedom and happiness. 

21/1/2017 Another watch sold

Today I sold my remaining watch.

Tag Heuer Men's CJF211A.BA0594 Link Automatic Chronograph Day-Date Watch

I bought this watch on 28th December 2010 at Changi Airport. 

This watch is part of my memory. I was working with a SME company providing OSVs on the Gorgon Project in Australia. I was rotating with another colleague of mine on a month rotation basis. It was just after Christmas and I need to spend new year in Perth. Actually, it was a very good experience to watch the fireworks from Applecross. 

This watch signifies a journey and an achievement unlock.

Personal Finance Habits since young

Since young I have cultivated the habit of saving, for every $1 my parents gave me when I am in primary school, I will save $0.3-0.5 out of it and put it in my piggy bank. Back then one bowl of noodles only cost $0.5 and drinks only cost $0.30 in school. We used to stay at my grandfather's place and my uncle was running his fruit wholesale business back then. My sister and I would help to count his coins and stack them nicely for him and he would pay us $1 each for our hard work. :)

Sweet memories.

In secondary school days, I would save up my money to buy Super Nintendo RPG games such as Final Fantasy, Chrono Trigger and Secrets of Mana. I didn't remember having a lot of allowance but a mere $3-4 per day. 

JC days were the same, I would be able to save some from my allowances. At 19, I entered BMT as a recruit, it was tough, back then was only paid about  $250 as a recruit and as a corporal about $400+. Throughout the army days, I got to teach tuition and performed guard duties (people sell their guard duties) on behalf of others for money. I did have some money to party but on a very budget mode every Wednesday, Friday and Saturday. I remember I would take the night rider instead of taking taxi. 

I remember to go out on dates during university days, I worked every single holiday whereas my wealthy friends will go for exchange and travels. I have worked as store man, dress up as an elf at Raffles Place for an event, work as a zoo facilitator (that's fun) and giving 2-3 tuitions for the entire 4 years. The money I saved since army allowed me to pay down $15k of my university school fees and loan the rest from my father.

I continued to give tuition from 2007 to 2009 during my first 3 years of working to supplement my income. Tuition days were tough. I remembered that I had to brave the rain to reach my student's house, walked in the afternoon sun (in short brave the weather) and waited at the bus-stop late at night after classes. In order to save some money, I went to the bus-drivers' coffee shop to buy dinner as the price is cheaper than other places. I remember my first take home paycheck was not even $2k. It was $1,999 less CPF contribution and charity to Chinese Society. I was very hungry to be rich. 

Fast forward 10 years after graduation, despite earning high income, my saving habit is still the same. I am able to save at least 50% of my income for investment. I can easily afford the Audi Q7 and AP watch my secondary school classmate has but I choose not to. It is a choice, a lifestyle choice. Maybe it is a habit which I have cultivated since young. 

I am your typical millionaire next door. I will highly recommend that you read that book.

16/1/2017 Investment Journey - Acquisition

Today I learn something from my mentor. One of the key counters which I am holding on made an announcement that together with other two parent companies will acquire a company in Australia. The parent companies and the counter will hold 40%, 40% and 20% respectively. On the surface, paying AUD 7 billion for a very high gearing company (approximately 6b in total debt) does not justify the rationale of acquisition.

I was told to look up the Average Cost of Debts of the 3 companies, one of the parent company has an Average Cost of Debts at about 5% taking into consideration of 2016 debentures and perpetual securities. The Average Cost of Debts for Acquiree is about 6%. The ROA is using Net Operating Income over Total Assets as a ratio is about 2.6% for the acquiree. We are trying to investigate whether it is a situation of trying to use their reputations to get a low cost of finance which can inevitably reduce finance cost for every 1% equates to another 100m.

The cost of acquisition is AUD 7 billion less AUD 1 billion of cash.

Another possible reason is to diversify its core UK-centric business to Australia and shift its currencies as well.

If it is only a $5/share special dividend plus this year dividend of say $2.9 (3% increase) will be a total of $7.9/share. A dividend yield will be approximately 10.8%. It is a disappointing situation where I thought more special dividend will be issued.

11th January 2017 Internet Marketing - Alvin Phang AzonBible

I sign up for this course as I want to go all out into eCommerce and make it work. I will update again after attending on the 8th April.


Brief notes from the session:

Good planning + massive action = possible profitable results

Learn something new because you try. Most successful people learn from failure and get used to failing. Successful biz owners fail a lot.

Why Amazon?

Amazon global search : buy more than 100 free shipping to singapore

Electronics is very cheap. Good thing is no pirates stuff

Why Amazon? 304 active customers 

171 million unique visits per month

20 million prime customers

Prime customers got to pay us99 per year to become, free storage up to 2gb and free streaming of music tv shows. Prime is free super fast for USA customers to receive/ free shipping

No fees for listing 

No charges

Wiki invest on Amazon 

Things you do not need

No website needed

No need to drive traffic - so many visitors u can get 5-100 visits per day

No need to write blog

No need to advertise 

3 ways to make Amazon

1. become affiliate - 6% commission (you sell Amazon products). You can sell branded product, you can use Amazon link to grow your branding e.g. Sell branded stuff
2. Amazon kindle book publishing ( time consuming to write ) 
3. Sell items to Amazon FBA ( earn up to 400%) fulfillment by Amazon - automated method

You send products to Amazon 

Use alibaba b2b website which provides wholesale pricing 

Escrow -> order the product, pay the money to alibaba first, will only release the money if product is good quality and satisfied

30 FBA warehouse in USA 

Amazon will store the product, picks and pack and ship products to customer

Send things that sell

Research 

Step 1 find a high demand niche market

Preferred above 20,000 search volume

Search key word

Buyer key words

If he search "popiscle molds" in Amazon they want to buy. This is different from google search.

See reviews add one zero behind is the quantity been sold. Out of every 10 sales, you get 1 review.

Step 3 find online china sillier and order them send them to Amazon FBA

Sell multiple colours

Ensure your niche is in the top 3 suggestions keywords on Amazon.com

E.g. Fire pit top 3 shows fire pit cover, 

Amazon seller plans

Professional us39.99 per month

Can run deals

Comes with Business report - conversion rate 

Amazon gives priority to pro sellers

Individual 0.99 per item sold

More than 40 sales then upgrade to professional

Amazon fee 15%

tinyurl.com/modua 

Wholesale

Private label

Amazon will rotate in buy box, two customers they will prioritize, Amazon themselves, FBA sellers and merchant sellers. They don't like things in their warehouse 

Not more than 4-5 sellers in the Buy Box. If not u will get rotated to be on the left side front page.

Us buyers don't do extensive research unlike singaporeans.

Private label 

Your own brand

Unless u order more than 500, then put own mould logo. If not don't bother.

Cannot find idea - go daiso to see

BSR #15 in home & kitchen

Make us21k

Himalaya glow lantern case study

The class can learn

Research - identity what sells very well on Amazon 

How to find competitors

Their average sell price

Sourcing - Negotiate 

Promotion - get more sales by ranking your product on Amazon 

Focus one or two products.

Profit from 50-500% per sale through private label

Starting capital $100 to get started with wholesale 

Expect up to 100+ sales per week

Peak season sells up to $100,000

Toys cannot buy from Alibaba

Proven china and USA suppliers we use

Spare 1 hour per day monitor your sales

A working laptop

Extra coaching

Session 1 - help in your listing 

Session 2 - help in promotion

3 x online coaching 

1 hour one to one skype call

MBA or not & Secondary School Gatherings in 2017

January is the month to have gatherings with friends and family. I was talking to one of my close Secondary School friends and he seems to be at a crossroad in life. He is thinking to run his own business or take up a top MBA such as INSEAD.

I highlight to him that INSEAD is an one year full time MBA. The opportunity cost will be SGD 200k for course fees and say SGD 100k for his annual salary which is a total of SGD 300k. This amount if invested can make a modest 4% which is SGD 12k. This path will cost him a total of SGD 312k. Personally I feel that if he takes this amount of money to run a business, he can learn more than the MBA can offer and it stands a chance to improve his current financial position.

Yes, the benefits of a prestigious MBA are the network and the career path which can be opened up for him. There are also parties to attend and lots of fun time to have with fellow classmates. MBA helps me to have the ability to look at the company holistically and externally such as competitors' analysis. 

Today there is another class gathering and one of the classmate is working as a senior RM. He claims that everybody is a millionaire once they sell their house. This is not a true definition of a millionaire. That is an assumption that there is another person willing to buy at a higher price from you and you do not need to deploy the money to buy another house to stay in. I am very blessed that we manage to slightly cross the 7 digits net worth in 2016 (at age 34) with half of my house paid for and the remaining fully invested in stocks. There is still SGD 305k of mortgage loan outstanding. So if you net that off assume we need to pay down the debt then we won't be considered as a millionaire. I have friends who become self-made millionaire before they turn 30. If you want to be like them, you need to take the self employment route.

I look at my friends, most of them have nice big cars, stay in condominiums and have very nice lifestyles such as holidays. I paused for a while and question myself whether this is like a scene when I was at a primary school gathering back in secondary school days when I am the odd one out and all my primary school classmates are from prestigious secondary school. They did not have much to say to me back then. I shook that thought off. Firstly, I do not need to compare anymore, I do not need to prove myself to anyone. Everyone has their own path. What I believe is in cash flow. That is the true gauge of wealth. I will rather gauge by when the person can retire and become financially free.

My definition of financially free is 

"Cashflow Flow (passive) - Expenses - Debt expenses > 0 ".

My current plan is for my wife to retire in another 5 years time and by 2021 I will have a dividend income of about SGD 100k per annum. I will love to enjoy expensive toys but what I value more is freedom and time with family.

12/1/2017 investment journey

Recently I switched out all my Prada shares to acquire more shares of another great company. Then these few days, Prada share price went from $27 to $31.25! This means I didn't get to make another SGD 5k. It will not stop there and tomorrow will rise further. 

I sold my GLP shares at SGD 2.47 and news of potential sales are out in the market, it dash all the way to SGD 2.62. I think it is not going to stop there and the bidding war will start. GLP will most likely challenge SGD 2.8 and subsequently SGD 3.

I think I cannot sell any more shares because whenever I sell them, they will rise in price. Strategy is to hold and keep them forever. In Singapore, I have another 3 more counters which I will like to acquire, ST Eng, SATS and Singpost.

Myanmar Related Stocks

I was chatting with my friend on whatsapp and he is looking into emerging market Myanmar for investing idea. I went to google and saw this article from Fool.sg. Out of the 3 stocks, I only took a glance at Yoma and Singapore Myanmar Investco which have significant portion of their revenues from Myanmar.

1) Yoma Strategic Holdings Ltd (SGX:Z59)

Yoma is an investment holding company that has revenues from real estate, tourism, agriculture and transport. 

The company is leveraging its experience and network in Myanmar to partner with prominent multi-national companies to penetrate their business into the market. For example, Yoma collaborates with US-listed Yum! Brands Inc to bring its franchise KFC restaurants into Myanmar. Its KFC network has grown to seven stores and a quarterly revenue run rate of SGD 2.7m. Yoma has a JV with Mitsubishi Corp to distribute vehicles in the country.

From Yahoo stock screener, it shows that Yoma has a consistent upward trend for Gross Profit since 2013 to 2016. Net Income shows a straight upward line. Its Total Liabilities has tripled from 2014 65,000 to 2016 212,000. Yoma does not have positive cashflow yet. Yoma's new businesses will incur losses in the near-term and requires the necessary infrastructure to sustain long-term growth.

Personally, I do not agree with the remuneration system that is currently in place. It is not aligned with Shareholders' interest.

2) Singapore Myanmar Investco Ltd (SGX: Y45)

Singapore Myanmar Investco Limited, formerly Singapore Windsor Holdings Limited, is an investment holding company. The Company's segments include Trading of industrial products; Trading of F&B products; Provision of telecommunication towers and related services; Europcar rental vehicles, and Duty free and retail operations. It offers travel and fashion retail, which includes airport retailing; auto services, which provide car rental and limousine services-Europcar sole franchise; construction services, which distribute sany construction equipment and spares; food and beverage, which imports and distributes food and beverage products, and franchises; infrastructure services (telecom services), which own telecom infrastructure; infrastructure (logistics), which includes logistics and warehousing services in Myanmar; serviced offices, which provides serviced offices, and telecom equipment services, which distribute business-to-business telecommunication products and services.

In November 2016, Singapore Myanmar Investco has issued placement shares of S$0.42 to raise S$16.5 million to fund its expansion plans in Myanmar. Singapore Myanmar Investco is making effort to reduce its debt level since 2013 till 2016. The debt level is seen to reduce from 260,000 to 23,000. The company is still in growth stage and does not have positive cash flow. 

I like the Myanmar story and believes that it is a land of opportunity but the financial numbers from the above two companies are not convincing for me to invest my money. 

4/1/2017 Some general thoughts while waiting for wife

I sat in a small cafe at Raffles Place, I overheard an insurance agent who is pushing for sales and her sales pitch was like," There are people with 100k seating in the bank and this plan will ensure 1.88% interest per annum" and she continues to shove different packages to her client.

Ignorance is not a bliss, it can be very expensive. It is important to equip yourself with financial knowledge. At least you can protect yourself when dealing with many unscrupulous salespersons. I am not saying all insurance agents are bad, I have met a friend who is sincere in financial planning and he does a good job in helping people to plan for finances and goals.

4/1/2017 Internet Marketing Journal

Today is a significant milestone for 2K Club. We have concluded that we should individually go out and run our own campaigns but share cost on fixed monthly subscriptions such as Voluum and STM. The online 2k Club chat group will still be used to facilitate sharing and learning.

I need to step up and reach out to my Affiliate Managers and start to run some campaigns. I have backslide on this. Action action action!

2016 JC Fund Dividend Income Report Card

I called my personal fund JC Fund. It is a time of reporting my dividend income. 

It has been a very volatile year. I remember that I was at a family event in August 2016 when I met my cousin, he told me that he had sold all his US shares. He felt that there was limited upside and the presidential election is making him nervous. I asked whether he is invested elsewhere, his reply is "no". Looking on a hindsight, it is easy to comment that he had made a mistake. The US shares continue to rise with its Trump-rally. I have witnessed Investment Banks' shares rise by more than 20% within a month! Unfortunately, I was not invested in them. The lesson here is always stay invested. I strongly believe in keeping most of my wealth in shares unless all the stocks in your portfolio are already overpriced. In addition, there is no other shares to hold and the general overview of the market is overly bullish. Then I will sell down half of the holding and keep them in cash, ready to ride with the reversal of tide, shorting the market. It is always easy to comment on a hindsight. The process is psychologically challenging and not meant for the undisciplined and faint hearts.

I am pleased to inform that JC Fund dividend income has increased from S$17,492.99 in 2015 to S$ 28,590.68 in 2016. I compared JC Fund's performance to STI Index, STI Index at the start of 2016 to the end of 2016 is a mere -0.03% change, JC Fund has increased close to 25% less the money and dividend income pumped in. I thought the dividend income can be higher but one of the counter's dividend will only be paid in February 2017. Hence, it is not accounted for this year dividend.

Overall, I am pleased that JC Fund is doing well and I am on route to allow my wife to retire in 5 years time. I always emphasize to my friends to invest earlier because the compounding effect will be very significant when we are close to our retirement age. Not a lot of them understands this or does not have the option to invest due to their circumstances. I conducted free financial planning for a close friend to help him understand his financial status. I hope everyone can gain financial knowledge as it is a very important life skill. It is not taught in school and it should be a core subject.

I hope that in 2017, I will still continue to have my job so that I can continuously invest more money in more stocks. I also need to monitor our property developers' balance sheet for this year, just in the event they default on their bonds, it will be a double whammy to SG economy.