UOBKayhian on 17 Feb 2014
FY14F PE (x): 13.5
FY15F PE (x): 11.4
Below our expectation. Olam reported 2QFY14 revenue of +4.3% qoq). The lower yoy revenue growth was due to lower commodity prices and lower sales volume (-5.3% yoy). Net profit fell 12.5% yoy to S$135m but was higher qoq on seasonality. For 1HFY14, EBITDA rose 5.4% yoy as management is now focusing on higher-margin products. Results were below our expectation (30% of our forecast) as we were expecting higher sales volume. Maintain HOLD with a lower target price of S$1.56 (previously S$1.60), based on a revised 11x FY15F PE, or a 30% discount to its long-term forward PE of 16.1x, equivalent to 1SD below long-term mean PE. Entry price is S$1.30.
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