SINGAPORE (Nov 18): Improvement of profitability of core business and growth of underlying sales have prompted OCBC to keep its “buy” call on QAF Limited with a fair value of $1.27.

In a Tuesday report, OCBC says QAF’s 3Q15 results came in within its expectations.

Revenue was down 5% y-o-y to $243.2 million due to FX translation effects, while PATMI rose 30% to $10.5 million.

These translation effects are a result of the group’s operations in Australia and Malaysia, whereby the SGD has been stronger vs AUD and MYR.

Without the translation effect, Bakery and Primary Production business segments continued to see growth in sales.

Overall operating margins improved from 4.4% in 3Q14 to 5.8% this quarter due to better product mix and efficiencies which helped increase profitability for the group’s bakery operations in Singapore, Malaysia, Philippines and Australia as well as its pork production side.

Looking ahead, management expects “satisfactory” profitability for the year.

“Following minor adjustments to our top-line expectations, we keep our BUY rating with fair value estimate of S$1.27,” says OCBC.

QAF is trading at $1.07.