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QAF Limited’s Latest Earnings: An Overview Of The Trading and Logistics Business

QAF Limited (SGX: Q01) is a food production company which organises its business into four segments, namely, Bakery, Primary Production, Trading and Logistics, and Investments. Some of the more prominent brands the company has in its portfolio are Gardenia, Cowhead and Farmland.

The company recently released its full year results for the financial year ended 31 December 2017 (FY17). Given the diversity of QAF, it might be useful for investors to assess each business segment’s performance separately.

In this article, we will have a quick overview of the performance of QAF’s trading and logistics segment.

Source: QAF Limited FY17 Full Year Results Release

As a quick introduction, QAF’s trading and logistics segment is involved in the trading and distribution of food and beverage products, and provision for warehousing logistics for food items.

Overall, we can see that the business had fruitful year in FY17. The stronger revenue was driven by increased sales at Ben Foods, along with growth in e-commerce and export business.

EBITDA (earnings before interest, tax, depreciation and amortisation) jumped 43% year-on-year mainly due to the absence of impairment charge of S$2.1 million in FY16. Excluding the charge, EBITDA would have been up by S$0.1 million year-on-year.

As for its future outlook, the company sees good opportunities in export sales to regional markets and e-commerce channels. Nevertheless, the domestic trading business would be significantly affected due to the ammonia leak in its warehouse at Fishery Port Road, resulting in a stop worker order issued by the Ministry of Manpower.

In sum, the trading and logistics segment delivered a solid performance in FY17, with opportunities expected in exports and e-commerce channels. In the short-term, however, its business would be affected by the disruption of the warehouse.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.