Dairy Farm

Re: Dairy Farm

Postby winston » Mon Mar 10, 2014 8:06 pm

not vested

FY13 earnings for Dairy Farm were above expectations on lower than expected operating expenditure.

Management continues to be Asia-focused, and will expand to attractive markets and business segments while seeking to attain better operating efficiencies.

We raised FY14F earnings by 14% on higher margin assumptions.

Upgrade to BUY with higher target price of US$10.07 (Prev US$ 9.46) on higher earnings.


Source: DBS
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Re: Dairy Farm

Postby winston » Fri Aug 01, 2014 8:34 am

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Dairy Farm Intl ST: as long as 10.5 is support look for 11.1 <DAIR.SI>

Click here to see our chart: http://www.tradingcentral.com/chart/DFI ... 005218.gif

Our pivot point stands at 10.5.

Our preference: as long as 10.5 is support look for 11.1.

Alternative scenario: below 10.5, expect 10.3 and 10.2.

Comment: the RSI is above its neutrality area at 50. The MACD is below itssignal line and positive.

The stock could retrace in the short term. Moreover,the stock is trading under its 20 day MA (10.7) but above its 50 day MA(10.55).

Supports and resistances: 11.3 **11.2 *11.1 ** 11 10.69 last 10.6 10.5 **10.3 *10.2 **

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Re: Dairy Farm

Postby winston » Mon Aug 04, 2014 8:45 am

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Southeast Asia continues to drag
DFI SP / DAIR.SI
HOLD - Downgrade
US$10.69 /TP US$10.60
Mkt.Cap:US$14,454.00m
Avg.Daily Vol:US$2.38m
Free Float:22.00%

At 43% of our FY14, 1H core net profit of US$223.3m (-2% yoy) was 11% below our and consensus expectations due to continued margin pressure, especially in Singapore and Indonesia. An interim DPS of 6.5UScts (flat yoy) was declared.

1H14 marked the slowest yoy sales growth since 2009, while the group experienced its first earnings contraction in eight years (barring 2013 due to comparability issues). We trim our FY14-15 core EPS by 1-3% on lower margins, though our residual income-based target price is left intact.

With the recent climb in share price, we believe the market has similarly priced in a modest growth trajectory. Hence, we downgrade the stock to Hold from Add. We would re-visit the stock upon stronger-than-expected earnings.


1H14 results: continued margin pressure

Dairy Farm grew its turnover by 4% yoy to US$5,299m. In line with recent trends, there was healthy sales growth in all formats, except Food.

In our view, the main negative from the results was the continued margin pressure across all formats as Diary Farm experienced increased cost pressures, particularly in Singapore and Indonesia.

The group achieved a core EBIT margin of 4.6%, down 0.4%pts yoy. On a brighter note, Dairy Farm showed strong cash generation of US$313m (+31% yoy or 1.3x of headline profits) as it tightened its working capital management. The group is in a net cash position of US$568m.


Singapore and Indonesia, the black marks

Worryingly, the group’s Singapore grocery retail operations is conceding market share to competition, while management is struggling to cope with the restrictions in foreign labour hires in the country.
Further, 7-Eleven and Guardian Singapore are also impacted by cost pressures.

In Indonesia, its 81%-owned PT Hero achieved a robust 17% yoy sales growth in Rp terms. However, the strong growth was eroded when translated into US$. Its margins dived to 0.8% from 3.6% in 1H13 on the back of increases in minimum wages, electricity charges and an expanded store base.

Downgrade to Hold

Following the recent climb in its share price, we believe that the market has similarly priced in a moderate turnaround for the group. We downgrade the stock to Hold from Add.
Source: CIMB
Previous "Dairy Farm Int'l" reports...
10/3/14 Co.Results Turning the corner (AD, US$9.13 /TP:10.60)
15/1/14 Co.Flash Pan-Asian retail franchise at break-up value? (AD, US$9.50 /TP:11.90)
9/10/13 Co.Note Window of opportunity (OP, US$10.33 /TP:11.90)
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Re: Dairy Farm

Postby winston » Mon Aug 04, 2014 9:26 am

not vested

Dairy Farm - 1H14 earnings impacted by higher costs.

Limited upside, downgrade to HOLD

1H14 earnings for Dairy Farm within expectations, but cost pressure dampened margins.

Challenging cost environment ahead; the Group is focusing on improving efficiencies going forward.

We have trimmed FY14-15F earnings by 3-4% to factor lower margin expectations.

We roll forward our DCF based valuation matrix, resulting in a slightly higher target price of US$10.39 (Prev US$ 10.07).

Downgrade to HOLD given the limited upside.

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Re: Dairy Farm

Postby winston » Thu Aug 07, 2014 7:37 am

Hong Kong: Dairy Farm has solid first half

Dairy Farm International has reported a solid set of results for its fiscal first half, largely due to the performance of its Health & Beauty business. For the half, sales grew by 5% to US$5.3bn, although underlying profit was down 1.8% to US$224m.

Sales at its Food business edged up 1.1% to $4.13bn, as it continued to face cost pressures, particularly in Southeast Asia. The hypermarkets and supermarkets reported a 0.3% uptick, while the convenience stores did better, growing by 4.4%.

Dairy Farm said its banners in Hong Kong performed satisfactorily, as did those in Malaysia, but outlets in Singapore and Indonesia recorded lower profits.

The Health & Beauty division saw sales grow by 9.3% to $1.19bn, helped by a good performance by the Mannings chain in both Hong Kong and Macau. Mannings also reported better results in mainland China, helped by the rationalisation of its store network and product offer. However, the Guardian banner in Singapore, Malaysia and Indonesia reported lower profits due to challenging trading conditions.

Dairy Farm said it continues to invest “significantly” in existing stores, its IT infrastructure and its supply chain. It said that although traditions are expected to “remain challenging” in the second half, it is “well placed to drive long-term growth with strong market positions in its major businesses”.

Source: www.kamcity.com
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Re: Dairy Farm

Postby winston » Tue Aug 12, 2014 9:19 am

Further headway into China

DFI SP / DAIR.SI | HOLD - Maintained | US$10.17 /TP US$10.60
Mkt.Cap:US$13,751.00m | Avg.Daily Vol:US$2.38m | Free Float:22.00%

Unlike its rivals, Dairy Farm has always resisted opening its flagship supermarket/hypermarket format in China. However, seven years after its acquisition of 110 Quik convenience stores from Lianhua, the group is increasing its exposure to the Chinese consumer via its proposed acquisition of a ~20% interest in Yonghui Superstores.

On balance, we are marginally positive on the investment as Yonghui is a quality operator.

Furthermore, growth in North Asia could offset the Southeast Asia drag. The seemingly pricey investment cost is a con. Nonetheless, if Yonghui achieves its growth targets (this time with Dairy Farm’s help), this is an investment which could make sense by 2015. Pending the completion of the transaction, we keep our FY14-16 forecasts and residual income-based target price. Maintain Hold.


What Happened

Dairy Farm has agreed to acquire 19.99% interest in Yonghui Superstores (601933 CH, Not Rated) for approx. US$925m or Rmb7/share. It has also entered into a business co-operation with Yonghui. The two groups will collaborate on areas such as procurement, private label product development, fresh food processing and store development.

Pending the approval of the transaction (which could take six months to complete), Dairy Farm will have the right to nominate two directors to the board of directors and one member to the supervisory board. Dairy Farm will fund the investment with its internal cash and new borrowings. The group is in a net cash position of US$568m.


What We Think

On balance, we are marginally positive on the investment, though we think that the investment cost seems pricey, especially on a trailing basis. Dairy Farm’s investment cost values Yonghui at 0.9x trailing EV/sales, in line with the average of previous M&A transactions in the sector.

However, considering the profitability matrices, the investment values Yonghui at a trailing EV/EBITDA of 18.2x and P/E of 39.5x, which can be considered pricey by its own right. Recall that Big C acquired Carrefour Thailand for US$1.2bn in Nov 2010, or at 13x trailing EV/EBITDA.

Nonetheless, if Yonghui achieves its growth targets (this time with the help of Dairy Farm), the investment could make sense by 2015. Based on Bloomberg consensus, the investment values Yonghui at 21x CY15 P/E and 9x CY15 EV/EBITDA (in line with peers’ average).

What You Should Do

Maintain Hold. We would be buyers with conviction at US$9.20/share, which is the group’s estimated break-up value.

Previous "Dairy Farm Int'l" reports...
1/8/14 Co.Results Southeast Asia continues to drag (HD, US$10.69 /TP:10.60)
10/3/14 Co.Results Turning the corner (AD, US$9.13 /TP:10.60)
15/1/14 Co.Flash Pan-Asian retail franchise at break-up value? (AD, US$9.50 /TP:11.90)

Source: CIMB
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Re: Dairy Farm

Postby winston » Tue Mar 10, 2015 6:36 pm

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Dairy Farm Int'l - Moving in the right direction

2H14 core net profit of US$276m was within our and consensus expectations, bringing FY14 core net profit to US$500m (+4% yoy), 99% of our
full-year forecast.

Sub-par performance from its ASEAN food business was offset by lower taxes and minority interest.

We cut our FY15-16 EPS by 4-6% due to lower sales and margin assumptions (mainly supermarkets/hypermarkets) and introduce FY17 forecasts.

FY14 performance offers us optimism that the group is moving in the right direction and that margins have bottomed out.

Given an earnings rebound and attractive relative valuations, we upgrade the stock to Add from Hold, with a higher residual income-based
target price (implied 25x CY16 P/E, its 5-year mean).

Catalysts include stronger earnings.

Source: CIMB
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Re: Dairy Farm

Postby winston » Mon Aug 03, 2015 4:27 pm

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HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2015
Highlights

Sales of continuing businesses up 3%, and at constant rates of exchange up 7%

Underlying profit 14% lower

Continuing margin weakness in Food despite sales growth

Investment in Yonghui Superstores in China completes

Acquisition of San Miu supermarkets in Macau

"While sales have been broadly positive across most businesses, margin pressures continue to impact the financial performance of the Food business. The Group’s results were impacted further by adverse exchange rate movements.

We are pleased to have completed the investments in Yonghui and in San Miu. We are focusing on delivering a clear value proposition to our customers as part of our modern retail offering, and we remain well positioned to take advantage of our regional footprint, our competitive position in key markets and our strong financial position.”
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Re: Dairy Farm

Postby winston » Tue Aug 04, 2015 8:33 am

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The road to recovery is never smooth

Dairy Farm’s 1H15 core net profit of US$193m (-14% yoy) was below our and consensus expectations at 35% of our FY15 forecast.

All formats saw margins pressures. ASEAN remained a drag while the exceptionally strong HK showed some normalisation.

An interim DPS of 6.5 UScts was declared (flat yoy). The results were admittedly disappointing, particularly on the back of an
encouraging 2H14. However, we also take heart from the positive performance of Yonghui.

We cut our FY15-17 EPS forecasts by 9-17% as we factor in lower margins. This reduces our residual income-income based target price (implied 27x CY16 P/E, its 5-year mean).

The recent share price weakness suggests an upside potential, with stronger 2H a re-rating catalyst.

Source: CIMB
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Re: Dairy Farm

Postby behappyalways » Tue Aug 04, 2015 2:38 pm

Extremely acute margin pressures choke Dairy Farm's recovery story in H1
http://sbr.com.sg/retail/news/extremely ... tory-in-h1
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