Delfi - DBS Research 2023-03-01: A Robust Growth Plus Dividends Play

Delfi - A Robust Growth Plus Dividends Play

  • Delfi (SGX:P34) reported its FY22 results, with revenue and net profit up 19.2%/68.7% y-o-y to US$483m and US$43.9m, respectively, beating our revenue and net earnings expectations by 4.7%/29.3%. The excellent performance was attributable to all-round strong performance from both its brands and agency brands, and tight cost controls. Of note was double-digit growth of premium brands in Indonesia, especially SilverQueen and Cha Cha.
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Our views on Delfi

  • Management is preparing for a monster FY23. Given the substantial increase in inventory levels, we believe Delfi's management is likely confident that FY23 will be a very strong year. However, this is something to watch for given potential risk of inventory write-offs should demand fall short of expectations.
  • Indication of robust demand ahead of upcoming major festivals. Delfi's management indicated that they have been able to push more products to distributors ahead of the first Valentineā€™s Day and Lebaran without COVID restrictions in 3 years. We remain optimistic, but watchful of potential significant distributor returns and write-offs should end-demand be lacklustre.
  • FY23F/24F revenue revised up 12.3%/11.4%. We revised our revenue projection for Delfi up on back of cautious optimism on sustained demand growth for chocolate especially in Indonesia, as chocolate consumption remains underpenetrated, suggesting untapped market potential.
  • FY23F/24F earnings revised up 31.8%/32.1% respectively. We revised our earnings forecast for Delfi up significantly on the back of blowout FY22 earnings. We expect earnings growth to taper from a record FY22 with lower gross margin due to higher input costs. Delfi's net margin should also come off from a flow through of lower gross margin and higher dividend withholding taxes.

Maintain BUY recommendation on Delfi with revised target price of S$1.52.

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Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @

Andy SIM CFA DBS Group Research | Singapore Research Team DBS Research | 2023-03-01

Previous report by DBS:
2022-08-12 Delfi - Bouncing Back Strongly, 1H22 Performance Surpassing Pre-COVID.

Price targets by 2 other brokers at Delfi Target Prices.
Listing of research reports at Delfi Analyst Reports.

Relevant links:
Delfi Share Price History,
Delfi Announcements,
Delfi Dividends & Corporate Actions,
Delfi News Articles

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