Company Coverage
Delfi (DELFI SP): 1H26: Notable Performance Amid Multiple Challenges
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$0.76
S$0.98
+28.9%
S$1.68
Analyst
Analyst
Highlights
Cocoa prices and forex remain near-term constraints. We hope easing input costs and established brand strength could support a recovery in 2027.
Delfi reported 1H26 earnings growth of 5% yoy despite operating in an environment of elevated raw material costs and weak currencies. Revenue was in line with our expectation, but earnings were below our estimates.
Maintain BUY with a 42% lower target price of S$0.98, pegged to 17x 2027F PE, based on the historical mean.
Analysis
1H26 revenue in line, while earnings lagged. Delfi reported 1H26 revenue of US$266.6m (+2.7% yoy) and PATMI of US$12.9m (+5.4% yoy), forming 52% and 44% of our 2026 full-year forecasts respectively. Growth was driven by resilient own brands demand and strong growth in regional markets, partly offset by weaker agency brands’ sales following the termination of an agency account. However, elevated raw material costs and weaker regional currencies continued to weigh on profitability, with gross margin declining to 25.7% (1H25: 27.5%).
Own brands strength remains a key growth driver. Own brands accounted for around 65% of group sales, and delivered 13.3% yoy growth in 1H26, supported by resilient underlying demand despite lower promotional spending in Indonesia and strong performance in the Philippines. This helped offset a 12.4% decline in agency brands following the termination of an agency account in 3Q26. Given that own brands typically carry higher margins and allow for greater control over pricing and product mix, this stable revenue base positions Delfi well to benefit as input cost pressures ease.
Highlights
Cocoa prices and forex remain near-term constraints. We hope easing input costs and established brand strength could support a recovery in 2027.
Delfi reported 1H26 earnings growth of 5% yoy despite operating in an environment of elevated raw material costs and weak currencies. Revenue was in line with our expectation, but earnings were below our estimates.
Maintain BUY with a 42% lower target price of S$0.98, pegged to 17x 2027F PE, based on the historical mean.
Analysis
1H26 revenue in line, while earnings lagged. Delfi reported 1H26 revenue of US$266.6m (+2.7% yoy) and PATMI of US$12.9m (+5.4% yoy), forming 52% and 44% of our 2026 full-year forecasts respectively. Growth was driven by resilient own brands demand and strong growth in regional markets, partly offset by weaker agency brands’ sales following the termination of an agency account. However, elevated raw material costs and weaker regional currencies continued to weigh on profitability, with gross margin declining to 25.7% (1H25: 27.5%).
Own brands strength remains a key growth driver. Own brands accounted for around 65% of group sales, and delivered 13.3% yoy growth in 1H26, supported by resilient underlying demand despite lower promotional spending in Indonesia and strong performance in the Philippines. This helped offset a 12.4% decline in agency brands following the termination of an agency account in 3Q26. Given that own brands typically carry higher margins and allow for greater control over pricing and product mix, this stable revenue base positions Delfi well to benefit as input cost pressures ease.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
S$0.76
S$0.98
+28.9%
S$1.68
Analyst
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
