- 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.
- - Read this at SGinvestors.io -
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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 Valentine’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.
- Read more at SGinvestors.io.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Andy SIM CFA DBS Group Research | Singapore Research Team DBS Research | https://www.dbs.com/insightsdirect/ 2023-03-01
Read also DBS's most recent report:
2023-08-10 Delfi - Continues To Be A Sugary Delight.
Price targets by 4 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
