SINGAPORE (Aug 11): CIMB is maintaining its “hold” call on cocoa manufacturer and supplier Delfi, with an unchanged target price of $2.69.

CIMB analyst Jonathan Seow says trading environment in the first half of 2016 was “definitely better” than a year ago, and Delfi’s core net profit in 1H16 was in line with expectations at 46% of FY16 forecast.

While Indonesian sales fell 1.4% y-o-y in 2Q in constant currency terms, Seow says outlook is positive for Indonesia, with signs of increased consumer spending.

“We view [this] as a relatively strong performance, given the timing difference of the Lebaran festivities and changes in regulatory standards that disrupted the importing of products and hampered agency sales,” Seow says in a Thursday report.

Meanwhile, Seow points out that Delfi’s regional markets fared poorer, as Malaysian consumers struggled and the Philippines underwent product streamlining.

However, a big positive is the continued uptrend of Delfi’s gross margin in the quarter, Seow says.

2Q gross margin reached record-high levels at 33.3%, compared to 31.9% in 1Q16 and 29.3% in 2Q15.

The improvement is mainly attributed to prior price hikes and product resizing; rationalisation of underperforming products; and higher sales of premium own-brand products.

“This drove core net profit growth of 3.0% y-o-y and kept 2Q16 earnings within our expectations,” says Seow.

As at 4.44pm, Delfi is trading 2.4% lower at $2.44.

Sweeter first half for Delfi

Creative Technology expects 2HFY2022 revenue to be below target at US$27 mil

Straits Times Index decline resumes as it could head towards 3,000 

DBS says it remains buyers of Digital Core REIT after further downside in price

Opening up to new horizons: Digital assets as a means of settlement in cross-border transactions 

Three-quarters of Singaporeans answered scam calls recently: Toku  

Businesses in Singapore eager to hire international talent with the rise of remote work

Nio Inc delivers 12,961 vehicles in June, up 60.3% y-o-y

Sweeter first half for Delfi

Related Stories

Highlights

ARA US Hospitality Trust to sell four Hyatt Place hotels for US$32.5 mil

Related Stories

Broker's Digest: Wing Tai Holdings, Keppel DC REIT, Del Monte, DFI Retail, ComfortDelGro

CDG, CDL, DBS, Keppel, Sembcorp in CGS-CIMB's ESG top picks list

DBS slashes Nanofilm's TP to $3.70 with dampened demand in near-term