We think that rising commodity prices, particularly cocoa, have impacted Delfi's profitability and will lead to further margin contraction in 2024. Downgrade Delfi to HOLD with a lower target price of S$1.07 (S$1.76 previously).
2023 results slightly above expectations...
- Read this at SGinvestors.io -
- Read this at SGinvestors.io -
…but margins see significant contraction.
For 4Q23, revenue growth was sustained (+5.6% y-o-y, +1.9% q-o-q), but gross and net profits fell substantially by >20% y-o-y. While this is partially attributable to the reopening post-COVID-19 in 2022, as well as increased promotions to counter competition, 1Q and 4Q are typically better-performing periods in preparation for festivities (Valentines’ Day and Lebaran).
We are of the view that rising commodity prices, particularly cocoa, have impacted profitability and will lead to further contraction in 2024.
Record-high revenue driven by growth across markets and business lines.
Read more at SGinvestors.io.
Above is an excerpt from a report by UOB Kay Hian Research. Clients of UOB Kay Hian may be the first to access the full PDF report @ https://www.utrade.com.sg/.
