Asked on 15 Aug 2019
Discuss anything about share price, dividends, yield, ratios, fundamentals, technical analysis and if you would buy or sell this stock on the SGX Singapore markets. Do take note that the answers given by our members are just your opinions, so please do your own due diligence before making an investment!
Far East Orchard is a relatively unknown company on the SGX. However, what I noticed is that it has been constantly declaring a dividend of 6 cents annually. At a current price of $1.18 per share, this translates to a yield of 5.02%
Is the 6 cents dividend sustainable?
This is the first question I had in mind. While delving into Far East's cash flow, I did not use the reported figure under " net cash from operating activities" but instead "Cash before working capital changes"; this eliminates the chance of companies using trade receivables or trade payables to juice up their operating cashflow. Below is what I found for Far East Orchard:
FY14: $50.9 Million
FY15: $36.2 Million
FY16: $24.7 Million
FY17: $27.2 Million
FY18: $28.9 Million
Far East Orchard has been receiving cash inflow as dividends from its joint ventures of overseas assts. A quick look into their investing activities shows the varying level of dividends received.
Cash inflow from Dividends of JV, found in investing cashflow:
FY14: $2.8 Million
FY15: $17.4 Million
FY16: $27.5 Million
FY17: $14,1 Million
FY18: $36.7 Million
To sustain Far East's Dividends, the company needs to generate about $26 million. Netting off interest expense (of about $5.5-6.0 Million) and income tax expense, it seems Far East Orchard has a sufficient buffer of cashflow to sustain its 6 cents dividends
Far East Orchard is a famous property developer in Singapore. Notable properties of the company include Novena Health Centre and Novena Specialist Centre. I had been to these 2 centres lately, and was quite impressed by the work of the firm. Here, I do a brief F-Piotroski analysis on the stock.
These numbers were taken from SGX and the annual report.
Based on the F Score, it can be seen that Far East Orchard's financials have neutral financial health. This is because the firm's performance has slowed down lately, despite high profitability margins.
Personally, I would prefer to look at a stock with improving financial health, and cheap valuation. Although Far East Orchard's valuation is cheap, certain aspects of their financial performance is left to be desired.