Delfi has proposed a final dividend of 1.72 US cents per share.
See more: Delfi reports US$33.2 mil patmi for FY2025; proposes final dividend of 1.72 US cents per share
Analysts have turned quite positive on the group’s prospects, believing that the worst is over.
UOB Kay Hian (UOBKH) has upgraded its call to “buy” from “hold” with a higher target price of $1.12 from 82 cents previously.
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Analysts Heidi Mo and John Cheong note that while revenue was a slight miss, full-year core profit beat forecasts, due to lower-than-expected selling and distribution expenses. Gross margin also declined to 26.5%, but the analysts view that recovery visibility is improving with cocoa prices easing to around US$3,000/tonne.
The 1.72 US cents final dividend brings total dividend 16% lower y-o-y to 2.72 US cents per share. This translates to a lower 50% payout ratio (FY2024: 58%). While historically payout ratios have exceeded 50%, management is exercising prudence given the ongoing volatility.
“In addition to higher earnings forecasts, we re-rate the stock from 14x FY2026 PE (0.5SD below mean) to 18x (historical mean), reflecting improving margin visibility and the early stages of an earnings recovery cycle as cocoa prices normalise. We see an attractive risk-reward profile as earnings momentum improves from a depressed 2025 base,” say Mo and Cheong.
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RHB Group Research has reiterated its “buy” call and increased its target price to $1.20 from 94 cents previously, as analyst Alfie Yeo expects better margins ahead.
Yeo has turned “more positive” on Delfi and has raised earnings estimates for FY2026 and FY2027 by 10% and 5% respectively, as cocoa prices continue to ease.
FY2025 earnings were in line, reflecting the group’s sound fundamentals. Yeo also likes the stock for its compelling valuation and sees Delfi as a long-term takeover target, given its strong market share and extensive distribution network across Indonesia.
“Delfi has further re-rated (from 11x to 14x historical PE) along with its peers, partly due to optimism from the market’s positive fund flows,” says Yeo, adding that he now pegs the stock from 13x to 15x FY2026 PE at 1.5SD of its historical mean forward PE.
DBS Group Research sees the group’s cocoa hedging strategy key in determining whether it is well-positioned to benefit from sharp correction in cocoa prices especially with industry covered at US$6,000/ton for 2026 versus US$3,000/ton spot price.
Analyst Chee Zheng Feng says that his recommendation and target price on Delfi is still under review.
He says: “Smaller players such as Delfi, with greater flexibility in cocoa procurement and typically shorter hedging horizons than the confectionery majors, should be better positioned to benefit from lower input costs into 2026 and improve competitiveness on pricing and margins.”
With Mondelez remaining an aggressive competitor, Delfi’s ability to capitalise on the current low cocoa price environment could translate into market share gains and a meaningful uplift in profitability. In parallel, Chee is seeing early green shoots in Indonesia, with improving consumer sentiment that could support a recovery in chocolate demand.
As at 4.40pm, shares in Delfi are trading 4.8% higher for the day at 99 cents.
