Delfi Limited reported a better set of earnings that was largely within expectations. 4Q16 revenue was up 5.6% YoY to US$105.6m while net profit grew to US$3.7m from US$0.8m.

Notably, gross profit margin continued improving to reach an all-time high of 38.4%, with earnings growth underpinned by strong Own Brands sales, pricing and sizing adjustments as well as other cost containment initiatives.

On a full year basis, revenue was marginally down 0.9% to US$402.1m, which met ~100% of FY16F estimate, while PATMI was higher at US$26.2m vs. a net loss of US$4.7m. Excluding an exceptional charge of US$2.0m against certain claims notified by Barry Callebaut, PATMI formed 92% of our full year estimate.

Pending more information at the analyst briefing, we maintain HOLD with fair value estimate of S$2.39. A final dividend of 1.35 S-cents/share was declared, bringing total DPS to 3.18 S-cents vs. 2.86 Scents (including special DPS of 1.11 S-cents) last year.

Source: OCBC Research - 23 Feb 2017