SINGAPORE (Mar 1): Delfi on Wednesday announced 4Q18 earnings increased 70.4% y-o-y to US$4.13 million ($5.57 million), while revenue was 8.1% higher at US$107.9 million.

For FY18, the group recorded a 6% increase in earnings to US$20.9 million compared to the same period a year ago, with a 12.0% y-o-y growth in earnings to US$427.0 million.

The group has also declared a final cash dividend of 1.10 cents per share.

Following the results announcement, RHB Research continues to rate Delfi “buy” with a higher target price of $1.68 from $1.59 previously. The stock is also RHB’s top picks for Singapore consumer counters this year.

The group’s FY18 revenue growth was mainly due to strong sales momentum in its premium products – especially in Indonesia, where sales of its own-brand products increased by 18% y-o-y.

Regionally, revenue increased by 10% y-o-y, led by both own brands and agency brands.

Higher contribution from premium products also improved its overall gross margin by 0.6 ppt.

In a Friday report, analyst Juliana Cai says, “Moving into 2019, the group should continue to enjoy higher demand for its confectionery products, driven by solid economic growth. It will continue to right-size or reprice lower-end products to ensure they generate sufficient margins, as well.”

Cai also reckons that this would improve gross margins.

Meanwhile, the group has fully implemented the SAP system last year, which should cause administrative costs to remain stable for FY19.

“Delfi’s share price has outperformed the STI by 5.2% YTD. That said, we believe there is still room for further upside, based on its prospects for FY19,” adds Cai.

As at 3.20pm, shares in Delfi are trading at $1.45, or 3.0 times FY19 book with a dividend yield of 2.3%.