Delfi, Raffles Medical seen to gain from soaring Indonesian economy, rupiah
WITH Indonesia’s economy going strong on a year-to-date basis and the rupiah outperforming its regional peers, consumer-related stocks would be among the key beneficiaries, said UOB Kay Hian (UOBKH) analysts in a research report on Thursday (Jun 8).
Other sectors such as healthcare, commodity plays, plantation stocks and marine-related stocks could also benefit from Indonesia’s strong economic fundamentals, noted UOBKH analyst Adrian Loh and its Singapore research team.
Chocolate maker Delfi, Marco Polo Marine and Raffles Medical Group are among some of the analysts’ top picks.
On the consumer front, the analysts remained bullish about Delfi’s growth prospects in Indonesia, which contributes about 70 per cent of its revenue. They projected that Delfi’s Indonesian earnings would grow close to double digits from 2023 to 2024 as Indonesia’s economy and consumers emerge stronger after the peak of the pandemic.
The company posted a 24.5 per cent increase in its earnings before interest, taxes, depreciation and amortisation for its first quarter ended March to US$25.5 million.
“Delfi’s share price should continue to outperform given its healthy balance sheet, positive operating cash flow and a consistent dividend payout ratio,” said UOBKH.
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UOBKH has put out a “buy” call on Delfi at a target price of S$1.71.
Indonesia’s recovery could also bring benefits to healthcare plays such as Raffles Medical. UOBKH estimates that a large majority of the group’s hospital segment revenue are from Indonesian healthcare tourists.
The segment accounts for 30 per cent of Raffles Medical’s total revenue, and analysts believe it could see a 25 per cent growth in revenue as travel picks up.
UOBKH is maintaining its “buy” call on Raffles Medical , with a target price of S$1.90.
In addition, investors could also look to accumulate plantation stocks, amid the stocks’ weakness. Those who do so may stand to gain when crude palm oil prices recover due to lower than expected supply growth, analysts said.
UOBKH noted that the yield of fresh fruit bunches has been affected by several climate events as well as a lack of fertiliser over the past three to four years. The research house projects this to continue till H1 2024.
“Thus, we recommend investors to accumulate plantation companies – especially upstream companies with high beta to crude palm oil prices – once their share prices weaken and when the expected weak H1 2023 results are announced,” said UOBKH.
Separately, analysts also liked Marco Polo Marine over potential upside from Indonesia’s robust economic performance and other tailwinds. They noted that the group’s shipping business has had an increase in both charter rates as well as utilisation rates, due to Indonesia’s recovery post-pandemic.
UOBKH has recommended “hold” on Marco Polo Marine at a target price of S$0.048.
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