{"id":326013,"date":"2023-12-06T22:16:28","date_gmt":"2023-12-06T14:16:28","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326013"},"modified":"2024-01-05T12:48:22","modified_gmt":"2024-01-05T04:48:22","slug":"stock-in-focus-dl-industries-inc-dnl-6-dec-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dl-industries-inc-dnl-6-dec-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: D&L Industries Inc. (DNL) – 6 Dec 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>DNL<\/td><\/tr>
Company Name<\/strong><\/td>D&L Industries Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>6 December 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 8.75<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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While we continue to remain optimistic on the long-term opportunities for DNL, we would advise investors to HOLD for now.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

DOE eyes B3 biodiesel blend by July 2024<\/h3>\n\n\n\n

The Department of Energy (DOE) is planning to push through with increasing the coco methyl ester (CME) content of biodiesel from 2% (B2) to 3% (B3) by July 2024. The move comes as the OPEC+ bloc of oil-producing nations agrees to increase its oil production cuts to 2.2-Million barrels per day until the end of Q1 2024. <\/p>\n\n\n\n

This is expected to keep supply tight and prices elevated, thus the DOE\u2019s efforts to lower the cost of fuel domestically through biodiesel blending. The Biofuels Act of 2006 mandates that all liquid fuels for vehicles sold in the Philippines should be blended with biofuels, and the blend was originally planned to be increased to 5% (B5) by 2020. However, this plan was long-delayed due to \u201cabsence of assurances on the sufficiency of biodiesel supply and logistical limitations brought about by the pandemic\u201d. <\/p>\n\n\n\n

DNL has been ready for years<\/h3>\n\n\n\n

DNL\u2019s subsidiary, Chemrez Technologies, Inc. already has the production capacity to serve B5 demand, according to DNL CEO Alvin Lao. Based on DOE data, Chemrez has the capacity to produce 90.0-Million liters of CME per year, tying for highest production capacity with Quezon-based Tantuco Enterprises. <\/p>\n\n\n\n

However, since the biodiesel blend has been stuck at B2 since 2007, Chemrez has been operating below capacity and margins remain low. The step-up from B2 to B3 would automatically increase demand by 50% and bolster Chemrez\u2019s revenues in the 2nd half of 2024. <\/p>\n\n\n\n

The company does not provide a separate report on biodiesel CME volumes, but Chemrez saw its sales volume rise by 46% YoY and contributed 41% to DNL\u2019s consolidated net income in 2022.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>