{"id":327032,"date":"2024-03-07T00:05:27","date_gmt":"2024-03-06T16:05:27","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327032"},"modified":"2024-03-07T00:05:29","modified_gmt":"2024-03-06T16:05:29","slug":"stock-in-focus-dl-industries-inc-dnl-7-march-2024-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dl-industries-inc-dnl-7-march-2024-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: D&L Industries Inc. (DNL) – 7 March 2024 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>7 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 7.52<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We retain our BUY recommendation on DNL with a Target Price of P7.52\/share, an upside of +12.73%. We believe that DNL would be able to benefit from the increase in biodiesel blend and as the Batangas plant achieves better efficiencies.<\/p>\n\n\n\n

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

D&L Industries, Inc. (DNL) recorded a decline to P503.33 million for its net income in the 4th quarter (4Q) 2023, down 38.41% year-on-year (y\/y), and dropped 30.81% y\/y to P2.3 billion for the entire year 2023. <\/p>\n\n\n\n

Revenues declined at a slower y\/y rate compared to previous quarters, down 8.30% y\/y to P8.7 billion, while 2023 saw its topline decline by 22.96% y\/y to P33.50 billion.
Bottomline saw stronger declines coming from a high base and due to high finance costs recorded in 4Q 2023, with expenses mostly coming from the Batangas plant.<\/p>\n\n\n\n

Despite recording a 40% y\/y increase in volumes under High Margin Specialty Products (HMSP) for 4Q23, DNL recorded a -116bps contraction in GPM to 16.04% due to COGS related to the Batangas operations. Management expects margins to improve once the Batangas plant reaches economies of scale. The plant\u2019s utilization rate is currently low, although this is already expected as the plant has just recently started operations.<\/p>\n\n\n\n

DNL saw the largest increase of revenue from its Oleo Chemical business, rising by +24.81% y\/y to P5.49 billion in 4Q 2023, the company meanwhile saw a moderate decline from its Food ingredients segment, dropping by -14.92% y\/y to P5.57 billion. Bottomline was mainly supported by the +157.76% y\/y increase in Colorants & Plastic Additives to P451 million in 4Q 2023.<\/p>\n\n\n\n

DNL is expected to benefit from the proposed increase of biodiesel blend from the current 2% to 3% this year and to 5% by 2026. Volumes from DNL should increase in line with the increase in biodiesel blend. Capex is significantly down at P1.4 billion for 2023, from P3.5 billion in 2022. Capex is expected to decline further as the company has no major capex requirement after the Batangas plant.<\/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>