UOB Kay Hian analyst John Cheong maintained a Buy rating on Delfi (PEFDF – Research Report) yesterday and set a price target of S$1.76.
John Cheong has conferred a Buy rating on Delfi’s stock based on several key factors. Firstly, the company’s 9M23 profit of US$32.8m, which is a 22.1% increase year on year, was in line with expectations, accounting for 69.8% of the full-year forecast. This was achieved on the back of a robust 15.2% revenue growth, driven by double-digit sales increases in both the Indonesian and regional markets. This performance highlights the efficacy of the management’s strategies to bolster its brands and expand its distribution channels.
In addition, despite the rising costs, Delfi still managed to record a strong 3Q23 with revenue, gross profit, and PATMI all showing year-on-year improvements. This was largely attributed to sustained consumer demand and the management’s prudent decisions in relation to strategic pricing, cost efficiencies, and a favourable sales mix, which largely offset higher input costs. Moreover, Delfi’s cash position remained strong at US$61.9m with no long-term debt, reflecting a solid operating cash flow. These factors collectively offer a compelling reason for Cheong’s Buy rating for Delfi’s stock.
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Delfi (PEFDF) Company Description:
Delfi Ltd manufactures and sells chocolate confectionary products in southeast Asia. Its core markets are Indonesia, which accounts for more than two-thirds of the company’s sales, and the Philippines. The company also sells its products in Malaysia and Singapore. Petra’s flagship brands include SilverQueen, Ceres, Delfi, Goya, and KnickKnacks. The firm imports cocoa, a primary raw material, from cocoa farmers in Nigeria and Ivory Coast in Africa. Geographically, it generates a majority of its revenue from Indonesia.
