Olam reported its 1Q16 results this morning, which in came weaker than expected. Revenue grew 10% YoY to S$4,761.4m, meeting 23% of our full-year forecast, as shipments also grew some 11%. Reported PATMI surged 213% to S$113.6m, but mainly due to lower exceptional charge (-87%) in the quarter; this relating to buybacks of high-priced bonds in both periods.

Operational PATMI though declined 6% to S$126.1m; while it still met about 30% of our FY16 estimate, it tracked below Olam’s 35-40% seasonal earnings contribution. We will be speaking with management to get more insights later. For now, we keep our HOLD rating but place our S$1.67 fair value under review.

Source: OCBC Research - 13 May 2016