Far East Orchard's EPS Drop: A Blip or a Trend?

As we step into the new fiscal year, Far East Orchard Limited (SGX:O10) has released its full-year 2024 earnings, revealing a decline in earnings per share (EPS) from S$0.14 in FY 2023 to S$0.12. This news has sparked curiosity and concern among investors, leaving them wondering if this is a temporary setback or a sign of things to come. Let's dive into the numbers and explore the potential implications.

At first glance, the 14.29% decrease in EPS may seem alarming, but it's essential to consider the broader context. The company's revenue growth (YoY) also slowed down, from 30.26% in 2023 to 4.49% in 2024. This slowdown in revenue growth, coupled with an increase in cost of revenue, contributed to the decline in EPS. However, it's crucial to note that the company's gross margin and operating margin remained relatively stable, indicating that the core business is still performing well.



Far East Orchard's scrip dividend scheme, which allows shareholders to elect to receive new shares instead of cash dividends, could be seen as an attempt to preserve cash and maintain liquidity in the face of the EPS decline. This scheme can provide an opportunity for shareholders to increase their stake in the company at a discounted price, potentially increasing their overall shareholder value in the long run. However, it's important to consider the potential dilution of existing shares when deciding whether to participate in the scrip dividend scheme.



In conclusion, the decline in Far East Orchard's EPS from S$0.14 in FY 2023 to S$0.12 in FY 2024 is a cause for concern, but it's not necessarily a red flag. The company's core business remains relatively stable, and the decline in EPS can be attributed to a slowdown in revenue growth and an increase in cost of revenue. As investors, we should monitor the company's performance closely and consider the potential implications of the scrip dividend scheme on shareholder value and liquidity. By staying informed and making well-researched decisions, we can navigate the market's ups and downs and build a strong, diversified portfolio.