By augustine16 //
September 8, 2023

Excerpts from UOBKayHian report

Delfi Ltd (SGX: P34)

  • Delfi remains the market leader in Indonesia’s chocolate confectionery market, backed by strong economic moats and its solid financial performance in 2022.
  • This growth momentum is expected to continue into 2023, as seen by the significant US$50.6m increase in inventory levels, signalling strong momentum in its sales this year.
  • In addition, chocolate consumption in Indonesia remains underpenetrated, providing Delfi with lucrative growth opportunities.

Maintain BUY and target price of S$1.71.

Strong economic moats from iconic brands name and established distribution network

Beyond Delfi’s strong balance sheet, its iconic brands and strong market distribution network place it in a good position to maintain its market leadership position and continue to capture further growth.

Macro indicators point to sustained performance for 2023

Delfi delivered an exceptional 2022 as earnings grew to US$43.9m (+49.9% yoy), driven by the strong double-digit growth in its two business lines, Own Brands and Agency Brands, across all its operating markets.

To recap, Own Brands and Agency Brands recorded respective increases in sales of 19.0% and 19.6% yoy. We expect demand to remain strong in Indonesia, its key market.

In 2022, Indonesia’s economy grew 5.3%, a solid recovery from the pandemic years where the economy contracted by 2.1% in 2020 and grew by only 3.7% in 2021.

According to OECD Economic Outlook in Nov 22, Indonesia’s GDP is expected to grow by approximately 5% in 2023 and strengthen slightly in 2024 as a result of favourable commodity prices and strong capital inflows.

On top of this, management reported a substantial US$50.6m increase in inventory levels last year, signalling confidence in continued sales momentum in 2023.

Healthy balance sheet and positive operating cash flow

Having scaled down long-term borrowings since 2015, Delfi had zero long-term debt obligations as at end-22. The group does however have short-term borrowings that are mainly used for financing the working capital to purchase cocoa beans.

Delfi’s net cash position remains healthy at US$58m, but is lower than 2021’s US$76m due to management’s heavy investment of US$50.6m in inventories as they anticipate boosted sales in 2023.

This was offset by Delfi’s strong performance during the year. We think Delfi’s healthy balance sheet and positive operating cash flow provide the group with a large enough cash buffer to weather any tough conditions.


Maintain BUY with a PE-based target price of S$1.71, based on 17x 2023F PE, pegged to its long-term mean. Delfi is currently trading at 11x 2023F PE, a 50% discount to Indonesia peers’ 2023F PE average of 22x.

Delfi share price chart
Delfi share price chart

You can find the full report here and the company website here.

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