Excerpts from UOB KH report
Analysts: John Cheong & Heidi Mo

Delfi (DELFI SP)
An Undervalued Leader In Indonesia’s Chocolate Products Market

Delfi is a dominant market leader of chocolate confectionary products in Indonesia with around a 41% market share.


Share price:
90 c


It has been focusing on its premiumisation strategy in offering differentiated products and undertaking acquisitions.

We expect earnings to grow 20% in 2022 and 10% in 2023 as Indonesia’s economy and consumers emerge stronger from the pandemic.

Initiate coverage with BUY and a target price of S$1.42.

Delfi is trading at a discount of 50% vs its Indonesia peers’ average.

Delfi choc

Market leader of chocolate confectionery products in Indonesia, backed by positive macro trends. Delfi is a manufacturer and distributor of many popular chocolate confectionery products in Indonesia.

According to Euromonitor, it commands a dominant market share of approximately 41% in Indonesia, thanks to its early-mover advantage in building brand loyalty since the early 1950s.

Its home market, Indonesia, where it generates more than 70% of its revenue, demonstrates vast potential based on its macro industry
trends of a fast-growing middle class, a young population and high domestically-driven GDP growth.

Well-positioned to capitalise on premiumisation trend. Delfi has been focusing on its premiumisation strategy to offer differentiated products based on changing consumer taste and increasing its focus on the modern trade sector.

High dividends
"Delfi has consistently maintained a dividend payout ratio of around 50% for many years, except for 2020 where its payout ratio increased to 84% due to Delfi’s move to maintain its absolute dividend amid a decline in EPS due to the impact of COVID-19. Given its robust free cash flow and strong net cash position, we expect the payout ratio to be maintained at at least 50% in FY22-24."


Delfi’s premium brands include SilverQueen, Delfi Premium, Selamat and Van Houten.

The acquisition of the iconic European brand Van Houten is a testament to its premiumisation strategy.

Barry Callebaut’s Top Chocolate Trends 2023 Report highlighted that consumers are now striving for intense, mindful and healthy indulgences, with 61% of the APAC market actively seeking out premium chocolates, while 56% have switched from traditional chocolates and confectionery to low-sugar alternatives.

Expect healthy double-digit growth as Indonesia’s consumers emerge stronger from the pandemic. We expect Delfi’s earnings to grow 20% in 2022 and 10% in 2023 as Indonesia’s economy and consumers emerge stronger after the pandemic.

Bank Indonesia projects Indonesia’s economy to grow 4.9% in 2023 and 5.1% in 2024. For 2022, Indonesia’s economy grew 5.3%, a solid recovery from the pandemic years where the economy contracted by 2.1% in 2020 and grew by only 3.7% in 2021.

Rising health consciousness and a surge in disposable income are seen to be the growth drivers

Full report here. 

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