Petra Foods’ 1Q14 reported results for continuing operations appears disappointing because of weaker regional currencies against USD on a YoY basis. Reported 1Q14 revenue declined 3.6% YoY to US$122.7m, forming 21.0% of our FY14 forecast.

Reported PATMI declined 1.6% to US$13.9m, making up 19.2% of our forecast. However, in constant currency terms, growth continues to be robust as 1Q14 revenue and PATMI increased by 15.7% and 14.8% respectively. Gross margin remained steady at 31.9% (vs. 31.7% in 4Q13).

In constant currency terms, 1Q14 Own Brands sales grew 16.0% due to both pricing adjustments and volume growth. We maintain BUY but put our fair value estimate of S$4.08 under review pending an analyst briefing later.

Source: OCBC Research - 8 May 2014