• Maintain BUY and SGD1.47 Target Price, 27% upside.
• Delfi’s 2Q18 results announced last evening were above our expectation. 1H18’s results met 57% of our estimates, while 2Q18 recurring PATMI grew 21% on strong revenue growth and margin expansion.
• With healthy economic growth in Indonesia, we expect confectionery demand to be sustained over the next 12 months. In addition, sales from regional markets should also rebound next year – this is when the negative impact from the discontinuation of agency brands normalises.
• Following the two years of culling less-productive SKUs, the growing traction of Delfi’s core brands should help the group maintain stability in margins moving forward, in our view.

Source: RHB Invest Research - 03 Aug 2018