External reports (aggregated public sources), Value Investors Club

Value Investors Club

External reports (aggregated public sources)

Equity Bottom-Up

Key points<ul><li>Delfi, the leading chocolate company in Indonesia, is experiencing challenges due to rising cocoa prices</li><li>Despite a decrease in share price, analysts remain optimistic about Delfi's future prospects</li><li>The company's management team is implementing strategic measures to protect profit margins and improve financial performance, with initiatives planned for 2024 expected to mitigate the impact of cocoa price increases</li></ul>This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Key pointsDelfi, the leading chocolate company in Indonesia, is experiencing challenges due to rising cocoa pricesDespite a decrease in share price, analysts remain optimistic about Delfi's future prospectsThe company's management team is implementing strategic measures to protect profit margins and improve financial performance, with initiatives planned for 2024 expected to mitigate the impact of cocoa price increasesThis content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

Delfi Ltd (DELFI.SI) - Friday, Mar 29, 2024

Research from Asian Century Stocks, Asian Century Stocks

Michael Fritzell

Research from Asian Century Stocks

Providing financial journalism in the Asia-Pacific

Asian Century Stocks

Asian Century Stocks is a newsletter providing financial journalism for companies and stocks in the Asia-Pacific. 
The Asian Century Stocks logotype “百” stands for “one hundred” or a “century”. The economic centre of gravity is moving towards Asia. Yet most global investors are missing out.

Thematic (Sector/Industry)

<ul>
<li>
In the past year, cocoa prices have spiked to elevated levels.
</li>
<li>
The culprit has been heavy rainfall in West Africa, leading to poor cocoa crops.
</li>
<li>
There’s nothing suggesting that the tightness in the cocoa market will end anytime soon. 
</li>
</ul>



In the past year, cocoa prices have spiked to elevated levels.


The culprit has been heavy rainfall in West Africa, leading to poor cocoa crops.


There’s nothing suggesting that the tightness in the cocoa market will end anytime soon. 



Quality-Value Investing

Marc Melendez, CFA

Emerging Market Small and Mid Cap Equities

Reperio Capital

Reperio Capital Research was founded in 2013 with the goal of better serving the investment community with in-depth, high quality, value oriented research.

Reperio means to discover in latin. Using value investing principles, we aim to discover a minimum of 12 investment opportunities per year within the Emerging Markets Small and Mid Cap universe.

We take a business owners perspective with a long term investment horizon. We conduct bottom up, fundamental research. We focus on downside risks and require a significant margin of safety in any investment to prevent the permanent loss of capital. All factors differentiating our research from the short term, trading focus of traditional research providers.

<a href="https://www.smartkarma.com/entities/delfi-ltd" target="_blank" data-smartkarma-citation="entities:19714:1" rel="noopener">Delfi Ltd (DELFI SP)</a>  is the largest branded chocolate company in Indonesia with a 50% market share. The company has a strong competitive position driven by the company’s brands being the standard by which Indonesians compare other chocolates an extensive distribution network. Multinational chocolate companies have been in Indonesia for decades but are unable to gain a strong competitive position. Delfi and <a href="https://www.smartkarma.com/entities/mayora-indah-pt" target="_blank" data-smartkarma-citation="entities:15131:1" rel="noopener">Mayora Indah (MYOR IJ)</a>, a local rival, have a combined market share of 80%.Despite the strength of the company’s competitive position, it trades at 5.2 times 2019 EBITDA. In 2018, Ferrero Rocher acquired Nestle’s US candy business for 20.7 times EBITDA. The US candy market is more mature and growing slower than the Indonesia Chocolate market and Nestle had a much weaker competitive position. Delfi is a very attractive asset to any acquirer. At 20 times 2019 EBITDA, Delfi is worth SGD2.62, 274% above the current share price of SGD0.70.  The Chuang brothers own a majority of Delfi’s shares and are all over 60. John Chuang, the CEO is 71. Joseph Chuang is 68 and William Chuang is 61. There is no family member inline to succeed. The highest position held by the next generation of the Chuang family is the Director of Information Technology. All make a potential for an acquisition over the next 10 years more likely.Assuming no acquisition and valuing the company on its current earnings with the current management team, Delfi’s base case valuation is closer to SGD1.25, 79% above the current share price. There is little downside. Assuming no growth and trough margins into perpetuity, the company’s fair value is SGD0.90, 28% above the current share price. Delfi is attractive at current prices.

Delfi Ltd (DELFI SP)  is the largest branded chocolate company in Indonesia with a 50% market share. The company has a strong competitive position driven by the company’s brands being the standard by which Indonesians compare other chocolates an extensive distribution network. Multinational chocolate companies have been in Indonesia for decades but are unable to gain a strong competitive position. Delfi and Mayora Indah (MYOR IJ), a local rival, have a combined market share of 80%.Despite the strength of the company’s competitive position, it trades at 5.2 times 2019 EBITDA. In 2018, Ferrero Rocher acquired Nestle’s US candy business for 20.7 times EBITDA. The US candy market is more mature and growing slower than the Indonesia Chocolate market and Nestle had a much weaker competitive position. Delfi is a very attractive asset to any acquirer. At 20 times 2019 EBITDA, Delfi is worth SGD2.62, 274% above the current share price of SGD0.70.  The Chuang brothers own a majority of Delfi’s shares and are all over 60. John Chuang, the CEO is 71. Joseph Chuang is 68 and William Chuang is 61. There is no family member inline to succeed. The highest position held by the next generation of the Chuang family is the Director of Information Technology. All make a potential for an acquisition over the next 10 years more likely.Assuming no acquisition and valuing the company on its current earnings with the current management team, Delfi’s base case valuation is closer to SGD1.25, 79% above the current share price. There is little downside. Assuming no growth and trough margins into perpetuity, the company’s fair value is SGD0.90, 28% above the current share price. Delfi is attractive at current prices.

Delfi: Indonesia's Dominant Chocolate Player at Available at 5.2 Times 2019 EBITDA

Making sense of the Global Market, Euromonitor International Ltd.

Yu Mitsuhashi

Making sense of the Global Market

Euromonitor International Ltd.

We are a global market research company focused on industries, countries, economies and consumers worldwide. Our cross-country comparable research helps your organisation identify opportunities and develop growth strategies in countries and regions across the globe. With offices around the world, 1,200 analysts in 100 countries and market research on every key trend and driver, we give you powerful access to the real story behind consumer change.

<h2>Headlines</h2><ul><li>Chocolate confectionery registers current retail value growth of 8% to reach THB6.9 billion in 2017</li><li>Novel new products drive growth</li><li>Boxed assortments registers the strongest current retail value growth of 9%</li><li>Average unit price increases by 2% in current terms</li><li>Nestlé (Thai) Ltd leads with 22% of retail value sales</li><li>Chocolate confectionery is expected to register a retail value CAGR of 4% at constant 2017 prices over the forecast period to reach THB8.5 billion in 2022</li></ul>

HeadlinesChocolate confectionery registers current retail value growth of 8% to reach THB6.9 billion in 2017Novel new products drive growthBoxed assortments registers the strongest current retail value growth of 9%Average unit price increases by 2% in current termsNestlé (Thai) Ltd leads with 22% of retail value salesChocolate confectionery is expected to register a retail value CAGR of 4% at constant 2017 prices over the forecast period to reach THB8.5 billion in 2022

Sector Capsule: Chocolate Confectionery in Thailand

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

In the week's ASEAN weekly, we feature an interview with Patrick Cao, the new CFO ofTokopedia. It is an on-line C2C marketplace and one of Indonesia's most successful e-commerce players, with around 30m active SKUs and 10m monthly users. In this week's insights, our own <a href="https://www.smartkarma.com/profiles/9" target="_blank" data-smartkarma-citation="accounts:9">Ke Yan, CFA, FRM</a> looks at <a href="https://www.smartkarma.com/entities/1087" target="_blank" data-smartkarma-citation="entities:1087:1">Sembcorp Industries Ltd (SCI SP)</a> and sees the stub as being overvalued. <a href="https://www.smartkarma.com/profiles/766" target="_blank" data-smartkarma-citation="accounts:766">Athaporn Arayasantiparb, CFA</a> reveals his <a href="https://www.smartkarma.com/insights/five-big-ideas-for-the-next-five-years" target="_blank" data-smartkarma-citation="insights:8457">Five Big Ideas for the Next Five Years</a> and he also looks at the beneficiaries from…

In the week's ASEAN weekly, we feature an interview with Patrick Cao, the new CFO ofTokopedia. It is an on-line C2C marketplace and one of Indonesia's most successful e-commerce players, with around 30m active SKUs and 10m monthly users. In this week's insights, our own Ke Yan, CFA, FRM looks at Sembcorp Industries Ltd (SCI SP) and sees the stub as being overvalued. Athaporn Arayasantiparb, CFA reveals his Five Big Ideas for the Next Five Years and he also looks at the beneficiaries from…

The Week that Was in ASEAN@Smartkarma - Big Ideas, Schools and Department Stores

Singapore

Petra Foods Limited manufactures and distributes branded consumer products, primarily chocolate confectionery, across Southeast Asia.

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Delfi Ltd (DELFI SP)

Delfi Ltd (DELFI.SI) - Friday, Mar 29, 2024

Delfi, the leading chocolate company in Indonesia, is experiencing challenges due to rising cocoa prices. Despite a decrease in share price,...

Value Investors Club

The cocoa question

In the past year, cocoa prices have spiked to elevated levels. The culprit has been heavy rainfall in West Africa, leading to poor cocoa crops.

Asian Century Stocks

Delfi: Indonesia's Dominant Chocolate Player at Available at 5.2 Times 2019 EBITDA

Delfi has a 50% market share in the Indonesia Chocolate market. Multinationals have been competing decades year and have 10% combined share....

Reperio Capital

Sector Capsule: Chocolate Confectionery in Thailand

Headlines Chocolate confectionery registers current retail value growth of 8% to reach THB6.9 billion in 2017 Novel new products drive growth Boxed...

Euromonitor International Ltd.

The Week that Was in ASEAN@Smartkarma - Big Ideas, Schools and Department Stores

In the week's ASEAN weekly, we feature an interview with Patrick Cao, the new CFO ofTokopedia. It is an on-line C2C marketplace and one of...

Angus Mackintosh

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