QAF Limited’s 1Q16 results were within expectations. Revenue was marginally down 2% YoY to S$250.9m due to exchange rate translation effects, particularly SGDAUD and SGDMYR. This met 25% of our full year estimate. Excluding FX translation effects, Bakery segment continued to see growth in sales, driven by new products and volume through expansion of production facilities.

Primary Production (Rivalea) also saw higher sales due to increased ASP on better product mix. Besides translation effects on the costs side, Bakery and Rivalea enjoyed lower raw material costs and feed costs. As a result, PATMI rose 25% to S$16.4m, forming 27% of our full year estimate. We maintain our BUY rating with fair value estimate of S$1.27 unchanged.

Source: OCBC Research - 27 Apr 2016