{"id":327055,"date":"2024-03-07T01:36:03","date_gmt":"2024-03-06T17:36:03","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327055"},"modified":"2024-03-07T01:36:05","modified_gmt":"2024-03-06T17:36:05","slug":"stock-in-focus-dl-industries-inc-dnl-7-march-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dl-industries-inc-dnl-7-march-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: D&L Industries Inc. (DNL) – 7 March 2024 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>7 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 7.87<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Overall, as inflation is expected to continue its decline while interest rates are expected to be lowered. This would bode well for DNL, especially its food segment as consumer spending power begins to return. We have a BUY rating for DNL with consensus Target Price of P7.87.<\/p>\n\n\n\n

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

Earnings down<\/h3>\n\n\n\n

DNL’s 2023 earnings registered a year-on-year (YoY) decline of 31% and 9% quarter-on-quarter (QoQ), to end at P2.3-Billion. If we exclude the Batangas Plant, 2023 income would be down 15% YoY and 24% QoQ to P3-Billion. Revenues declined 23% YoY and 4% QoQ. <\/p>\n\n\n\n

The two overarching drivers for the decline in revenues were: a.) the normalization in the market share of DNLs\u2019 commodity products, and b.) lower selling prices on HMSP\u2019s due to the pass-through of lower raw material prices to customers. This was despite improvement in HMSP\u2019s volume growth. 2023 export performance also declined by 33% leading to a 4ppts drop in its contribution to total revenues.<\/p>\n\n\n\n

Outlook<\/h3>\n\n\n\n

Looking at their Batangas plant, while management expects to get full utilization of the plant in 3 to 4 years, they nevertheless stated that historically a utilization rate of around 25% in their previous plants was already sufficient to yield profitability. <\/p>\n\n\n\n

Given that the cost structure of the new plant is similar to their older plants, they are therefore optimistic that it would not take a high utilization rate for the plant to at least-break even, or even to start contributing to earnings. With regard to 2024 earnings, the company is also quite optimistic that they could at least generate double-digit earnings growth of at least 10% given the low base.<\/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>