Petra Foods announced yesterday evening that it will cease its distribution business in Singapore as the business was not profitable for many years. As such, the group will look towards the novation of its agency brands portfolio and sale of related inventory to Auric Pacific Group, and further the development of their Delfi brand of chocolate confectionery with Auric Pacific.

This is not expected to have a material impact as Singapore only contributes about 4% to the group’s revenue. Management also stated that this does not indicate any change to the group’s overall strategy. As we continue to see more downside risk in their core market Indonesia, we are keeping our SELL rating with a fair value estimate of S$3.61.

Source: OCBC Research - 11 Jun 2015