Excerpts from RHB Research report
Maintain OVERWEIGHT on sector, Top Picks are Delfi, Sheng Siong and Thai Beverage. 
Delfi is focusing more on growing premium and higher-value products. Photo: CompanyYTD, the consumer sector has underperformed the STI. We believe consumer confidence in Singapore has peaked, but think there are still pockets of opportunities in companies with strong attributes and a bottom-up growth story.
We continue to favour players with market exposure to the region that are likely to benefit from stronger GDP growth and higher domestic consumption.
|
Company |
Rating |
TP |
% Upside |
P/E |
P/B |
Div Yld (%) |
|
Best World |
BUY |
2.95 |
46.0 |
11.4 |
5.0 |
4.4 |
|
Dairy Farm^ |
BUY |
8.25 |
1.4 |
22.4 |
6.5 |
2.8 |
|
Delfi |
BUY |
1.68 |
29.2 |
21.6 |
2.7 |
2.5 |
|
Food Empire |
BUY |
0.69 |
23.2 |
10.6 |
1.1 |
1.4 |
|
MindChamps |
BUY |
0.87 |
32.8 |
19.4 |
2.4 |
1.6 |
|
Sheng Siong |
BUY |
1.25 |
20.2 |
19.8 |
5.0 |
3.6 |
|
Thai Beverage* |
BUY |
0.92 |
11.5 |
20.9 |
3.6 |
2.4 |
|
BreadTalk |
Neutral |
0.81 |
(6.9) |
34.2 |
3.6 |
2.3 |
|
Genting Singapore |
Neutral |
1.08 |
11.3 |
13.8 |
1.4 |
4.1 |
|
Japan Foods** |
Neutral |
0.45 |
3.4 |
14.5 |
2.0 |
4.6 |
|
Kimly Ltd** |
Neutral |
0.24 |
0.0 |
12.0 |
3.0 |
4.2 |
|
Note: * data refers to FY19 (Sep) ** data refers to FY20 (Mar) ^data is in USD |
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• Delfi is one of our top picks amongst the Singapore-listed consumer names. It is the leading chocolate confectionery player in Indonesia in terms of market share.
With a steady 5% growth in the country’s GDP, we think Delfi is well-positioned to leverage on the rising middle class and higher purchasing power in Indonesia. In addition, with the general election looming, we expect consumer sentiment to remain buoyant. We forecast 19% growth in FY19F earnings, driven by strong revenue growth and improved operating leverage as fixed costs stabilised. |
 A Best World franchisee outlet in Zhengzhou. Photo: Wechat • Best World – best when entered at the right price. We still have a contrarian BUY call on the stock with a TP of SGD2.95. Best World’s share price declined recently due to concerns on the sustainability of its China growth and the lack of brand visibility from online searches.
As such, we believe growth momentum should still be strong in the near term. Currently, we forecast net earnings to grow at 52% for FY19. |
Full report here.
