QAF Limited’s (QAF) 3Q15 results came in within our expectations. Revenue was down 5% YoY to S$243.2m due to FX translation effects, while PATMI rose 30% to S$10.5m. These formed 23% and 21% of our full year estimates for revenue and PATMI, respectively. Without the translation effect, Bakery and Primary Production business segments continued to see growth in sales, on the back of new products and higher ASP.

Operating expenses also decreased, especially for Rivalea and the Malaysian Bakery operations, due to translation effect of a stronger SGD vs. AUD and MYR. Notably, better product mix and efficiencies helped increase profitability for the group’s Bakery operations in Singapore, Malaysia, Philippines and Australia as well as its pork production side. We are keeping our BUY rating and fair value estimate of S$1.27.

Source: OCBC Research - 16 Nov 2015