In a report released on May 21, Wee Kuang Tay from CGS-CIMB downgraded Delfi (PEFDF – Research Report) to a Hold, with a price target of S$0.71.
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Wee Kuang Tay’s rating is based on a combination of factors that suggest caution in the near term for Delfi’s stock. The company’s revenue for the first quarter of 2025 was relatively stable, but its EBITDA saw a significant decline, indicating increased operating expenses and reduced operating leverage. This decline in profitability is attributed to weaker consumer sentiment, elevated cocoa prices, and currency fluctuations, which are expected to continue exerting pressure on Delfi’s financial performance.
Given these challenges, Wee Kuang Tay has adjusted the earnings per share forecasts for the fiscal years 2025 to 2027 downward by 15.5% to 17.4%. This adjustment reflects a more conservative outlook due to macroeconomic uncertainties and their potential impact on consumer behavior and profitability. Consequently, the target price has been lowered, and the stock is rated as Hold, with the potential for improvement if profitability margins recover or if the company maintains its dividend payout ratio. However, there are downside risks, including the possibility of an economic downturn further affecting revenue and market share.
In another report released yesterday, UOB Kay Hian also maintained a Hold rating on the stock with a S$0.82 price target.