Comprehensive Financial Insights: A Deep Dive into Listed Companies

Date: 26 November 2024

Broker: UOB Kay Hian

Introduction

In the ever-evolving world of finance, staying informed about the performance and prospects of prominent companies is crucial for investors. This comprehensive analysis delves into the latest financial results and strategic recommendations for Delfi, SIA Engineering Co, and SATS as presented by UOB Kay Hian. Each company’s recent performance, market dynamics, and future outlook are thoroughly examined to equip investors with valuable insights.

Delfi Ltd: Navigating Margin Pressures

Delfi, a renowned manufacturer and distributor of chocolate confectionery products, recently released its third-quarter 2024 financial results. Despite facing significant challenges, the company’s performance remains noteworthy.

Financial Performance

Delfi’s Q3 2024 revenue reached US\$118 million, reflecting a 6% year-over-year decline. The company’s EBITDA also experienced a substantial drop, reaching US\$9 million, a 32% decrease from the previous year. Despite these challenges, Delfi’s 9M24 revenue and EBITDA accounted for 77% and 61% of the full-year forecast, respectively.

Market Dynamics

The Indonesian market, a key revenue driver for Delfi, witnessed a 10.3% year-over-year decline in sales due to reduced consumer demand and the termination of an agency brand in Q3 2023. Conversely, regional markets experienced a 2.9% increase in sales, buoyed by stronger agency brand sales in Malaysia and the Philippines.

Key Challenges and Outlook

Delfi faces ongoing margin pressures due to high cocoa prices and a shrinking middle class in Indonesia. The company’s gross margin declined by 2 percentage points to 26.4%, while the EBITDA margin fell to 7.5%. Despite these challenges, Delfi maintains a “Hold” recommendation with a target price of S\$0.86, reflecting a 5.5% upside potential.

Strategic Insights

Looking ahead, Delfi’s prospects are influenced by potential government policies in Indonesia aimed at boosting consumption. The company’s consistent dividend payout, yielding an attractive 6.5% for 2024, underscores its financial resilience. Investors are advised to monitor commodity price trends and the company’s efforts to diversify its product offerings.

SIA Engineering Co: Riding the Uptrend

SIA Engineering Co, a prominent player in the aviation industry, presents an interesting trading opportunity for investors seeking short-term gains.

Technical Analysis

The company’s stock is currently supported by a robust cloud, maintaining an upward trend. A potential bullish crossover of the conversion and base lines, coupled with a turning MACD, suggests a likelihood of the stock price rebounding higher. The target price is set at S\$2.55, with a protective stop at S\$2.33.

Trading Strategy

Investors are encouraged to consider a “Trading Buy” within the range of S\$2.36-2.37, with an approximate timeframe of 1-2 weeks. The institutional research supports a fundamental “BUY” recommendation with a target price of S\$2.70, indicating further upside potential.

SATS: Potential Downside

SATS, a key player in the food solutions and gateway services sector, presents a trading opportunity characterized by potential downside risks.

Technical Analysis

The stock’s price appears to have formed a potential top on 8 November 2024, capped by the middle Bollinger band and trading below the neutral RSI. These indicators suggest a possible decline in the stock price. The target price is set at S\$3.59, with a protective stop at S\$3.92.

Trading Strategy

Investors are advised to consider a “Trading Sell” within the range of S\$3.85-3.86, with an approximate timeframe of 1-2 weeks. Despite the current bearish outlook, the institutional research maintains a fundamental “BUY” recommendation with a target price of S\$4.30, reflecting confidence in the company’s long-term prospects.

Conclusion

This in-depth analysis of Delfi, SIA Engineering Co, and SATS provides investors with critical insights into each company’s performance and market dynamics. While Delfi navigates margin pressures and seeks growth opportunities, SIA Engineering Co and SATS offer distinct trading opportunities with varying risk profiles. Investors are encouraged to consider these insights when making informed investment decisions.