UOBKayhian on 17 Nov 2014
FY14F PE (x): 16.0
FY15F PE (x): 13.9
Below expectation. Olam reported 1QFY15 net profit of S$44.3m (up 391% qoq, -2.9%
yoy) or net core profit of S$32.2m (-33.7% qoq and -29.5% yoy) excluding the disposal
gains of S$12.1m from the sales of dairy processing facility in Cote d’Ivoire. The first
quarter is usually the weakest quarter for Olam.
Strategic plan update. Three more divestment initiatives are expected to be completed
in FY15 to release further cash of S$313.1m and to generate a divestment gain of about
S$22.4m. Net gearing of 1.85% as at end-Sep 14 was marginally higher than 1.82% as
at end-FY14.
Maintain earnings forecast. We are maintaining earnings expectation as the first quarter
is usually the weakest quarter for Olam and volume could pick up to compensate the
weaker margins and the loss of volume from discontinued operations over the next three
quarters.
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