Brokers’ take: RHB rates Delfi a ‘buy’ on strong fundamentals, compelling valuations
Vivienne Tay
RHB on Tuesday (Oct 3) initiated coverage on Delfi with “buy” and a target price of S$1.65.
It said the chocolate maker will be a beneficiary of Indonesia’s rising middle class and disposable income. It also believes Delfi is a potential takeover target due to the group’s strong penetration, distribution and market leadership in Indonesia.
The research team estimates that Delfi, as the country’s leading chocolate confectionery player, has a market share of about 45 per cent to 50 per cent.
It expects the company’s growth to be supported by higher demand and the consumption of chocolate products, and forecasts a compound annual growth rate of 13 per cent for the FY2022 to FY2025 period.
RHB noted that the stock is trading at 9.7 times the research team’s FY2024 earnings estimates, which is one standard deviation below its mean and peer average of 16 times.
Its target price of S$1.65, which is pegged to a price-to-earnings ratio of 13 times for FY2024, implies a potential upside of 33.1 per cent from the counter’s last trading price of S$1.24 as at 4.08 pm on Tuesday.
Delfi’s shares were down 0.8 per cent or S$0.01 at the time.
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