{"id":332772,"date":"2025-06-05T01:17:09","date_gmt":"2025-06-04T17:17:09","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=332772"},"modified":"2025-06-05T01:17:12","modified_gmt":"2025-06-04T17:17:12","slug":"stock-in-focus-dl-industries-inc-dnl-5-june-2025-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dl-industries-inc-dnl-5-june-2025-by-ap-securities\/","title":{"rendered":"Stock in Focus: D&L Industries Inc. (DNL) – 5 June 2025 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>5 June 2025<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 7.61<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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DNL\u2019s optimism for its exports market is backed by the growing profitability of its Batangas plant and its expanding list of international customers. Moving forward, higher HMSP exports volume would contribute to substantial margin expansion. We also note that DNL\u2019s forward P\/E ratio is still slightly more than 1-SD below its 10-year historical average and we believe valuations would revert to historical mean if DNL successfully carries over the 1st quarter (1Q) 2025 growth momentum to the 2nd quarter (2Q) 2025. As such, we believe the company is ripe for the picking and we reiterate our BUY rating on DNL with a Target Price of P7.61\/sh on the back of the stock\u2019s brighter medium-term outlook.<\/p>\n\n\n\n

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

D&L export sales to reach 50% of revenues<\/strong><\/p>\n\n\n\n

D&L President and Chief Executive Officer Alvin D. Lao said the company expects to sustain profitability as it remains on track to meet its target of having export sales account for 50% of total revenue over the medium term. This is in-line with our forecasts that export sales could reach 50% by 2029 if it can maintain an average growth rate of 12.91%.<\/p>\n\n\n\n

Moving forward, the company expects strong demand for their products to underpin revenue growth, after citing in previous briefings that growth opportunities in the export market was mostly held back by the lack of production capacity rather than by the lack of demand. The company has also downplayed the potential impact of the trade war, saying that US clients make up only around 3% of total sales. As such, we expect DNL\u2019s newly-built export-focused Batangas plant to continue outperforming company guidance as export volumes continue to pick up.<\/p>\n\n\n\n

High Margin Specialty Products (HMSP) is majority of exports<\/strong><\/p>\n\n\n\n

The exports market mainly drives growth in DNL\u2019s Food segment (73%), followed by Oleochemicals (16%), Specialty plastics (10%), and Consumer products ODM (1%). In addition, exports tend to have a higher gross profit margin versus the domestic market since most of DNL\u2019s export products are HMSP (High-Margin Specialty Products). In line with this, export (18.3%) and domestic (9.8%) markets have a stark disparity in margins despite both markets seeing
double-digit volume-driven revenue growth across most of its business segments. As such, we believe the capacity ramp-up for its Batangas plant will play a key role in the growth of DNL\u2019s export segment despite macroeconomic headwinds, as it satisfies the strong demand for its diverse product portfolio.<\/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>