- We trim our target price (TP) for DGW by 3% and maintain our MARKET PERFORM rating.

- Our lower TP is mainly driven by reducing our 2025-28F aggregate NPAT-MI projection by 6%. This is primarily due to increasing aggregate forecast selling expenses by 20%, which is partly offset by 8% higher aggregate gross profit in the same period. The negative impact of cutting our NPAT-MI projection is mitigated by rolling our TP horizon forward to end-2025. 

- As stated in previous updates, we reiterate our view that DGW’s foray into non-ICT categories (i.e., office equipment, consumer goods, and smart home appliances) during the period of 2022-24 will lead to double-digit earnings growth over the medium to long term. Nonetheless, in 9M 2024, SG&A expenses were higher than our expectation (SG&A/sales was 6.8%). We expect this trend to continue in 2025 to promote DGW’s new products/brands and attract customers, especially after DGW’s recent expansion into HORECA channels for ABInBev. As such, we reduce our 2025F/26F forecasts by 14%/9%, mainly because we increase our SG&A forecasts by 17% each for those years, respectively.

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