Hold Rating Maintained for Delfi Amidst Currency Depreciation and Margin Pressures

Delfi (PEFDF – Research Report), the Consumer Defensive sector company, was revisited by a Wall Street analyst yesterday. Analyst Heidi Mo from UOB Kay Hian maintained a Hold rating on the stock and has a S$0.82 price target.

Heidi Mo has given her Hold rating due to a combination of factors impacting Delfi’s financial performance. The company’s first-quarter results were in line with expectations, with revenue slightly declining due to currency depreciation, although it showed a modest increase on a constant currency basis. However, the EBITDA experienced a sharper decline, primarily due to reduced operating leverage and increased promotional activities, which pressured margins.
Despite the challenges, Delfi’s management remains optimistic about navigating short-term pressures, supported by a robust net cash position and strong cash flow. The company is focusing on expanding its market share through promotional investments, particularly in its premium own brands, even though this strategy has led to narrower margins. Given these dynamics, Heidi Mo maintains a Hold rating with a target price of S$0.82, reflecting a cautious outlook amidst the competitive landscape and cost pressures.

In another report released on May 21, DBS also maintained a Hold rating on the stock with a S$0.80 price target.

PEFDF’s price has also changed slightly for the past six months – from $0.614 to $0.560, which is a -8.79% drop .