Excerpts from RHB Research report


Maintain OVERWEIGHT on sector, Top Picks are Delfi, Sheng Siong and Thai Beverage.
Delfi chocs3.19Delfi 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
Name

Rating

TP
(SGD)

% Upside

P/E
Dec-19F

P/B
Dec-19F

Div Yld (%)
Dec-19F

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 
Source: Company data, RHB



• 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.

JulianaCai LinkedInOur investment thesis for Delfi is further strengthened by the stabilising of IDR vs USD this year.”

-- Juliana Cai

Prior to 2018, Delfi downsized its product portfolio to focus more on growing the premium and higher-value product range.

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.



outlet zhengzhouA 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.

JulianaCai LinkedInWhile the lack of visibility in Best World’s direct-selling and franchise model suggests that investors should be cautious, we believe that its current share price, at below SGD2.10, is very compelling and could offer substantial upside to investors to justify the risk.”

-- Juliana Cai

However, we note that management was still expecting 50% YoY growth in end-consumer demand for the China market during its 4Q18 results briefing.

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.


Share Prices

Counter NameLastChange
AEM Holdings0.9000.030
Alliance Mineral0.1890.002
Anchor Resources0.0100.001
AusGroup0.027-
Avi-Tech Electronics0.275-
Best World Int.1.360-
China Sunsine1.1700.010
CSE Global0.480-0.005
Food Empire0.520-
Geo Energy0.148-
Golden Energy0.1990.001
GSS Energy0.071-
HMI0.5600.005
ISDN Holdings0.2300.005
KSH Holdings0.465-
Miyoshi0.046-
Moya Asia0.0780.001
Nordic Group0.270-
Oxley Holdings0.3050.005
REX International0.0630.001
Riverstone0.9300.015
Roxy-Pacific0.400-
Sing Holdings0.380-
SingMedical0.400-0.010
Sino Grandness0.0590.002
Straco Corp.0.760-
Sunningdale Tech1.3100.020
Sunpower Group0.4500.015
The Trendlines0.079-
Tiong Seng0.220-
Uni-Asia Group1.120-
XMH Holdings0.163-
Yangzijiang Shipbldg1.370-0.010

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