Delfi Limited reported its 3Q16 results that came in within our expectations. 3Q16 revenue was up 2.4% YoY to US$86.6m, but in constant currency terms, underlying revenue was marginally down by 0.7%. Excluding exceptional charges in 3Q15, 3Q16 PATMI improved to US$5.9m from a net loss of US$1.2m in 3Q15. For 9M16, revenue was down 3.1% to US$296.5m while PATMI (excluding exceptional items) rose 55% to US$22.5m, meeting 71% and 70% of our full year estimates respectively.

Notably, 3Q16 gross profit margin continued to improve to 35.5% (28.4% for 3Q15, 33.3% for 2Q16) due to higher sales of Own Brands products, selective price adjustments, rationalization of underperforming products as well as ongoing cost containment initiatives. Pending an analyst briefing later, maintain HOLD with fair value of S$2.34.

Source: OCBC Research - 10 Nov 2016