We turn more positive on Delfi (SGX:P34), and raise FY26-27F earnings by 10% and 5% as cocoa prices continue to ease (-50% year-to-date).
FY25 earnings were in line, reflecting the company’s sound fundamentals. Valuation is compelling at PEG of below 1, with forward P/E trading well below the FY26F growth rate of 18%.
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FY25 earnings within expectations.
FY25 revenue was at US$500m (-0.5% y-o-y), while earnings stood at US$33m (-2.1% y-o-y), in line with our estimates. Revenue was relatively flat as lower sales in Indonesia (US$301m, -4% y-o-y) – dragged by currency translation – was offset by better regional sales (US$199m, +6% y-o-y), mainly driven by strong sales in Malaysia.
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Opex was better than expected, amid lower-than-expected GPM. Gross margin fell 0.87ppts to 26.5% on relatively high cocoa prices. EBIT of US$46m (-4% y-o-y) was line with our expectations.
A final dividend of 1.72 US cents was declared, bringing total FY25 Delfi's dividends to 2.72 US cents, exceeding our expectations and translating to a ~51% payout ratio.
Fundamentals remain sound; expect better margins as cocoa prices ease.
Read more at SGinvestors.io.
Above is an excerpt from a report by RHB Securities Research. Clients of RHB may be the first to access the full PDF report @ https://www.rhbtradesmart.com/.
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