Why Petra can shrug off 3Q's slight margin dip

A 'reasonable' drop, says analyst.

According to OCBC Investment Research, in terms of gross margin, it deems 3Q13's 32.4% (-1.3ppt YoY; -0.5ppt QoQ) to be reasonable in light of the higher cost inflation in its key markets (e.g. fuel hikes in Indonesia, weakening regional currencies). 

A gross margin of 32.0% remains our comfort threshold. That said, with Indonesia's central bank unexpectedly raising its key interest rate yesterday to address a burgeoning current account deficit, we can hopefully see GP margin inching higher for 4Q13.

Here's more:

3Q13 results in-line with expectations
Petra Foods’ 3Q13 results met our expectations with revenue increasing 10.4% YoY to US$126.9m. However, on a QoQ basis, the increase was only 1%, which reaffirmed our notion that sales growth this year would be slightly subdued following a fuel hike in Indonesia during 1H13.

Similarly, 3Q13 core operating profit grew 5.4% YoY (-1.5% QoQ) to US$20.9m while PATMI improved 3.9% YoY (+0.2% QoQ) to US$14.8m.