Olam International Limited (Olam) posted 2QFY14 revenue of S$4506.7m, down 8% YoY, affected by both lower commodity prices and lower sales volumes. Nevertheless, EBITDA grew 12.3% to S$279.3m, reflecting margin expansion from upstream and midstream initiatives. Although reported net profit fell 13% to S$134.9m, underlying earnings (excluding exceptional items) improved 31% to S$143.4m. For 1HFY14, revenue also fell 8% to S$8827.8m, meeting 38% of our full-year forecast, while net profit eased 9% to S$180.5m; underlying net profit of S$152.3m met around 44% of our FY14 estimate. We will be attending the analyst briefing later and will have more. For now, we maintain our HOLD rating but place our S$1.45 fair value (based on 10x FY14F EPS) under review.

Source: OCBC Research - 14 Feb 2014