SINGAPORE (Nov 11): OCBC is maintaining its “hold” call on Delfi, the company which markets and distributes its own brand of chocolate confectionery products, with a fair value of $2.39, noting that revenue and earnings have improved, with the company swinging back into profitability.

“We understand that the improvement has been driven to a larger extent by selective price adjustments,” says lead analyst Jodie Foo, “while various factors such as higher sales of own brands products, rationalisation of underperforming products, favourable raw material prices and other ongoing cost containment efforts have also helped.”

To recap, Delfi’s results were primarily driven by own brand sales, which made up more than 60% of total revenue. While own brand sales were similar year-on-year for 3Q, 9M16 was up 1.6% due to higher sales of premium products, partially offset by the rationalisation of underperforming its own brands in Indonesia and Philippines. Agency brands, excluding the cessation of the Singapore distribution business in Aug 2015, saw sales in local currency rising 6.2% in 3Q and 0.9% in 9M16.

(See also: Delfi swings back to profitability in 3Q earnings)

Gross profit margin has also sustained improvement, up 35.3% according to Foo.

Looking ahead, Delfi remains focused on top line growth and improved productivity, notes Foo. As the company continues to invest in channel expansion and brand building, Foo expects selling and distribution costs to stay high in proportion to sales.

Shares of Delfi traded flat at $2.20.