Delfi Ltd reported a set of results that were within expectations. 2Q17 revenue was down 5.8% YoY to US$100.2m while PATMI was up 14.4% to US$9.3m, helped by a one-off pre-tax divestment gain of US$4.6m.

1H17 revenue of US$193.3m and PATMI of US$14.9m met 49% of our full year estimates. 1H17 PATMI was down 10% due to lower Indonesian sales, and the group had eliminated the bulk of weaker performing SKUs in late 2016. Notably, 1H gross profit margin continued to sustain at ~33.1%. The Regional Markets division also saw higher underlying sales (in local currency) on the back of better Agency Brands sales.

Looking ahead, management expects FY17 results to be lower than FY16 as a result of higher spending on distribution capabilities and its core brands. An interim DPS of 1.66 S-cents was declared. Together with the 1.35 DPS paid in May-17, total DPS of 3.01 S-cents/share YTD is higher than 1.83 S-cents last year (excluding the capital reduction).

Pending more information from the analyst briefing, we keep our HOLD and FV estimate of S$2.21 for now.

Source: OCBC Research - 8 Aug 2017