CGS International
August 13, 2025
Delfi Ltd Faces Defensive Shift Amid Cocoa Price Surge and Margin Squeeze: Comprehensive Peer Analysis and Financial Breakdown
Executive Summary: Defensive Posture as Cocoa Costs Squeeze Delfi Ltd
Delfi Ltd, a leading player in the Singapore Food & Beverages sector, has been downgraded to “Reduce” by CGS International following its 1H25 results. The company’s earnings weakened as global cocoa prices surged and agency brand sales slipped, especially in Indonesia. Despite resilient own-brand performance in regional markets, margin pressures and cautious spending have dimmed prospects for above-baseline dividends and near-term growth.
Delfi Ltd: Margin Pressures, Dividend Cut, and Strategic Cash Preservation
- 1H25 core PATMI: US\$12.9m (-33.9% yoy, -10.0% hoh), in line with CGS estimates but missed consensus.
- 2Q25 revenue: US\$109.8m (-0.3% yoy), flat due to weaker Indonesian sales (-5.5% yoy), offset by growth in Philippines, Malaysia, and Singapore (+7.4% yoy).
- Gross profit margin: 26.9% in 2Q25, down 1.1ppt from 1Q25, attributed to higher promotional costs.
- EBITDA: 2Q25 US\$7.3m (-23.4% yoy), 1H25 US\$24.3m (-26.0% yoy).
- Operating expenses: Higher selling/distribution (+11.6% yoy) and administrative costs (+5.9% yoy).
Delfi’s management has flagged ongoing macroeconomic challenges and sustained high cocoa prices (average since 2024: US\$7.9k/MT vs. US\$2.6k/MT avg. from 2019-2023). Modest capex of US\$3.5m in 1H25 (vs. US\$18.6m in 1H24) signals a defensive strategy to preserve cash flow.
Dividend Update: The 1H25 dividend was 1.0 US cent/share (c.1.28 Sct), reflecting a 50% payout ratio—lower than FY23-24 yields of 5-6% when special dividends lifted payout to c.60%.
Share Price Performance and Analyst Recommendation
- Current Price: S\$0.775
- Target Price: S\$0.71 (unchanged, pegged at 11x FY26F P/E)
- Up/downside: -8.4%
- Consensus Ratings: Buy 0, Hold 3, Sell 0
Despite positive share price momentum since 1Q25 (linked to optimism around cocoa price declines from April’s peak), CGS International sees limited earnings growth for FY25F-26F and recommends a downgrade to “Reduce.” Upside risks include a steep cocoa price fall and possible special DPS in 2H25F, while de-rating catalysts include a broader economic downturn and market share erosion.
Delfi Ltd: Financial Table Highlights (Key Figures)
| Year |
Revenue (US\$m) |
Operating EBITDA (US\$m) |
Net Profit (US\$m) |
Core EPS (US\$) |
EPS Growth (%) |
FD Core P/E (x) |
DPS (US\$) |
Dividend Yield (%) |
EV/EBITDA (x) |
| Dec-23A |
538.2 |
74.27 |
46.26 |
0.076 |
5.4 |
7.97 |
0.043 |
7.16 |
4.57 |
| Dec-24A |
502.7 |
59.44 |
33.95 |
0.056 |
-26.6 |
10.86 |
0.032 |
5.37 |
5.85 |
| Dec-25F |
502.6 |
50.26 |
25.51 |
0.042 |
-24.9 |
14.45 |
0.021 |
3.46 |
6.97 |
| Dec-26F |
527.2 |
57.99 |
30.25 |
0.050 |
18.6 |
12.18 |
0.025 |
4.10 |
6.00 |
| Dec-27F |
553.2 |
63.62 |
33.19 |
0.054 |
9.7 |
11.11 |
0.027 |
4.50 |
5.50 |
Peer Comparison: Regional and Global Benchmarking
| Company |
Ticker |
Recommendation |
Price (local) |
Target Price (local) |
Market Cap (US\$m) |
CY25F P/E |
CY26F P/E |
CY25F ROE (%) |
CY26F ROE (%) |
CY25F Dividend Yield (%) |
CY26F Dividend Yield (%) |
| Delfi Ltd |
DELFI SP |
Reduce |
0.775 |
0.71 |
370 |
10.9 |
14.5 |
12.8 |
9.4 |
5.4 |
3.4 |
| Mayora Indah |
MYOR IJ |
Add |
2,200 |
2,360 |
3,036 |
17.5 |
18.3 |
18.0 |
15.6 |
3.4 |
3.0 |
| Indofood CBP Sukses Makmur Tbk |
ICBP IJ |
NR |
9,475 |
N.A. |
6,833 |
15.6 |
11.0 |
16.5 |
19.0 |
3.0 |
2.8 |
| Nestle (Malaysia) |
NESZ MK |
Reduce |
87.80 |
78.00 |
4,895 |
45.6 |
37.4 |
72.3 |
96.7 |
2.0 |
2.5 |
| Universal Robina Corporation |
URC PM |
Add |
80.55 |
104.0 |
3,035 |
14.5 |
14.3 |
10.3 |
9.8 |
4.7 |
4.7 |
| Mondelez International Inc |
MDLZ US |
NR |
61.39 |
N.A. |
79,435 |
17.8 |
20.3 |
16.7 |
15.0 |
2.9 |
3.1 |
| Hershey Co/The |
HSY US |
NR |
176.5 |
N.A. |
35,775 |
16.1 |
29.4 |
50.4 |
26.5 |
3.1 |
3.1 |
| Nestle SA |
NESN SW |
NR |
71.84 |
N.A. |
230,593 |
17.1 |
16.6 |
30.4 |
29.3 |
4.2 |
4.3 |
Financial and Operational Analysis
- Revenue Drivers: Indonesia revenue dropped 4.5% yoy in 1H25, mainly due to softer performance and a weaker Rupiah. Regional markets posted 7.2% yoy growth.
- Gross Profit: 1H25 US\$71.5m (-5.0% yoy); margin compressed to 27.5% (-1.3ppt yoy).
- EBITDA Margin: 1H25 at 9.4% (down 3.2ppt yoy), reflecting increased operating expenses.
- Dividend Yield: Forecasted at 3.46% for FY25F, rising to 4.50% by FY27F.
- Net Gearing: Remains low, at -5.8% for FY25F.
Balance Sheet Overview
| Year |
Total Cash & Equivalents (US\$m) |
Shareholders’ Equity (US\$m) |
Total Liabilities (US\$m) |
Net Cash/Share (US\$) |
BVPS (US\$) |
ROE (%) |
| Dec-23A |
59.4 |
266.2 |
154.7 |
0.044 |
0.44 |
18.1 |
| Dec-24A |
43.8 |
264.6 |
163.6 |
0.031 |
0.43 |
12.8 |
| Dec-25F |
41.0 |
277.3 |
148.0 |
0.027 |
0.45 |
9.4 |
| Dec-26F |
43.4 |
292.5 |
150.0 |
0.031 |
0.48 |
10.6 |
| Dec-27F |
41.4 |
309.1 |
152.4 |
0.027 |
0.51 |
11.0 |
ESG Performance and Corporate Governance
- LSEG ESG Combined Score: B- for FY24, with Social (B), Governance (C-), and Environmental (B+).
- Notable sustainability improvements: 2.49% decrease in energy consumption, 21% reduction in water intensity (FY21 vs. FY20), 100% water recycled/reused.
- Supplier assessment: 98% of Indonesian, 91% of Philippines, and 97% of new suppliers evaluated for ESG compliance.
- No reported breaches of corporate governance in FY23.
Ongoing claims from Brazilian tax authorities (potential exposure c.S\$17.7m) remain unresolved since 2015, with no impact yet factored into valuations.
Sector and Country Ratings Framework
- Stock Ratings: Add (>10% expected return), Hold (0-10%), Reduce (<0%).
- Sector Ratings: Overweight, Neutral, Underweight (market cap-weighted).
- Country Ratings: Overweight, Neutral, Underweight (relative to benchmark).
Conclusion: Outlook and Investment Considerations
Delfi Ltd faces a challenging operating environment, with cocoa cost inflation, weak Indonesian consumer sentiment, and elevated promotional expenses compressing margins and profits. While regional markets show resilience and the company maintains a disciplined approach to cash flow and capex, near-term dividend yields and growth are likely to remain under pressure. Peer analysis reveals Delfi trades at a discount to regional and global competitors on P/E and EV/EBITDA metrics, but the outlook is clouded by sector-wide input cost volatility.
Investors should watch for upside triggers like a sharp cocoa price reversal or stronger-than-expected dividend payouts, but also remain aware of potential downside risks from macroeconomic headwinds, consumer weakness, and unresolved legacy claims.
Rating Distribution of Covered Stocks
- Add: 70.6%
- Hold: 20.5%
- Reduce: 8.9%
As of June 30, 2025, CGS International covers 561 companies, with a minority also investment banking clients.
Price Performance Snapshot (Delfi Ltd)
- 1M: +0.6%
- 3M: +6.2%
- 12M: -8.3%
- Relative (12M): -55.2%
Major Shareholders
- Berlian Enterprises Ltd: 52.3%
- First Pacific Advisors LP: 6.0%
- Nesna LLP: 4.9%
Final Thoughts
Delfi Ltd’s defensive pivot is a response to exceptional cost pressures and uncertain demand, making it a cautious prospect for investors in the near term. However, its disciplined financial management, regional market resilience, and commitment to ESG best practices provide a foundation for recovery when sector conditions improve. Investors should monitor cocoa price trends, dividend developments, and macroeconomic signals for future opportunities.
