{"id":326117,"date":"2023-12-15T12:15:37","date_gmt":"2023-12-15T04:15:37","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=326117"},"modified":"2023-12-15T12:15:40","modified_gmt":"2023-12-15T04:15:40","slug":"stock-in-focus-dl-industries-inc-dnl-15-dec-2023-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dl-industries-inc-dnl-15-dec-2023-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: D&L Industries Inc. (DNL) – 15 Dec 2023 by Regina Capital Development Corp."},"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>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 December 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 6.79<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Despite the opening of DNL\u2019s Batangas plant, it would take some time before the company can realize the plant\u2019s potential. Based on our forecasts for DNL, we reiterate our BUY recommendation as share prices have fallen to near 52-week lows. Our Target Price represents a +12.40% upside to the last traded price. We attribute our rating to weaker sales volume and a more competitive landscape while maintaining our bullishness on DNL\u2019s food ingredients\u2019 growth.<\/p>\n\n\n\n

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

D&L Industries, Inc. (DNL)\u2019s bottomline in the 3rd quarter (3Q) 2023 fell by -39.30% year-on-year (y\/y) and 9-months (9M) 2023 fell by -29.45% y\/y on high base effects and operating expenses covering the Batangas plant. Topline also fell y\/y by -26.71% in 3Q23 and -27.31% in 9M23 as the previous year saw orders spike on additional volumes due to COVID. The effects of inflation have impacted the company\u2019s performance, leading to higher selling prices. These higher prices as a result have affected volumes.<\/p>\n\n\n\n

The company experienced significant declines in topline as DNL recorded unnaturally high volumes during the pandemic. For DNL, 2021 and 2022 saw volumes spike on its competitors’ inability to meet demand, giving DNL an advantage in the market. As DNL\u2019s competitors started to restart full operations, volumes started to decline. Competition has been an issue, as the company tries to find and maintain a balance in terms of pricing.<\/p>\n\n\n\n

The Batangas plant has recently opened and is expected to add a significant amount of revenue for the company, but this will take up to three years before DNL realizes the full capacity of its Batangas plant. Exports constitute around 40% of total sales. The Batangas plant will cater to the export business and processing of raw materials to finished products. As raw material prices are volatile, selling prices of its products would have to be adjusted regularly to reflect the higher input costs. DNL has recorded improvements in GPMs on higher sales contribution of high-margin products.<\/p>\n\n\n\n

Management expects the plant to run at 25% capacity this year, 50% next year, and 100% in two to three years. Our forecasts are a bit more tempered compared to management’s projections as we expect volumes to take some time to recover. Given DNL\u2019s current volume, we expect the Batangas plant utilization to increase but not as much as guidance expects. Catalysts for DNL would be the potential hike in biodiesel blend, Batangas plant operations, and an increase in key export markets.<\/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>