QAF reported 2Q results, which has deconsolidated the financial results of Gardenia Bakeries (KL) Sdn Bhd (GBKL) as it is now a JV of the group. As such, 2Q16 revenue was 17% lower at S$208.4m. Notwithstanding the deconsolidation, sales increased for all business segments (Bakery, Primary Production and Trading & Logistics). Expenses also decreased as result of lower raw material and feed costs, in addition to the deconsolidation of GBKL.

Excluding the one-off gain of S$9.7m from the sale of the group’s 20% in GBKL, PATMI still saw a significant increase of ~57%, underpinned by improved profitability in Rivalea (primary production segment). An interim dividend of 1 Scent/share has also been declared, similar to last year. Maintain BUY with fair value estimate S$1.27 for now.  

Source: OCBC Research - 15 Aug 2016