3Q13 within expectation. Results were within expectations, though higher than ours, with recurring net profit coming in at SGD121.5m. Olam recently announced its strategic review plan and this set of numbers is too soon to evaluate whether any progress have been made towards those objectives. Maintain SELL

Healthy yoy growth, but driven mostly by one segment. 3Q13 recurring net profit was up 23% yoy. Stripping out bio gains, net profit was SGD103.8m, up 30% yoy. For 9M13, recurring net profit is up by 15% yoy. However, it is worth noting that most of the growth has been driven by Food Staples & Packaged Foods, with Industrial Raw Materials segment rebounding from last year’s weakness. The two other segments showed yoy declines.

Profited from Rice in Nigeria. The strong performance in Food Staples & Packaged Foods in turn, was driven by margin gains in Rice. Management alluded to stronger-than-normal margins achieved in Nigeria this quarter, as a result of their stockpile ahead of the imposition of import tax in 1Q13. This segment may moderate in the coming quarters. The grains business which is relatively new, continues to drive very strong volume in this segment.

Adjusted-net debt/ equity still at historical high. The gearing matrix stood at 0.77x in the quarter, which continues to be at historical high. Management’s strategic review plan may reduce this going forward, but it is still work in progress. Similarly overhead expenses will have to be reined in, having grew 20% yoy. During the quarter, management demonstrated the positive sale of a 25.5% stake in its Nigerian instant noodles business to Sanyo Foods of Japan for US20m, which was significantly above its purchase price. However, this is a relatively small transaction in the overall scheme of debt on its balance sheet.

Work in progress. Maintain SELL. We think time will be needed for any restoration of its equity premium. Progress will have to be demonstrated in the coming quarters. We maintain our SELL call, with a TP of SGD1.55, which is pegged to 13X FY13F, slightly below its historical PER average mean.

Source: Maybank Kim Eng Research - 16 May 2013