Alfie Yeo of RHB has kept his "neutral" rating on DFI Retail, as he waits for the current "mixed" outlook to improve.

"China tourists to Hong Kong are still lagging pre-Covid levels, and grocery consumption in Singapore, China and Hong Kong remains unexciting for DFI," writes Yeo in his July 11 note.

"We stay cautious on a more aggressive recovery until DFI's key markets' domestic supermarket consumption and China outbound tourist numbers pick up."

Yeo notes that while DFI enjoyed better performance from its health and beauty and convenience store operations, the grocery and home furnishing segments remain "relatively poor".

He points out that just 2.8 million mainland Chinese visited Hong Kong in May - far below the pre-pandemic levels of between 4 and 5 million a month.

<span class='see_also_inread'><b>See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/capital/brokers-calls/rhb-upbeat-raffles-medicals-contract-win-providing-medical-services?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>RHB ‘upbeat’ on Raffles Medical’s contract win for providing medical services at Connect@Changi</a></b></span>

"We anticipate a gradual rather than firm earnings recovery towards 2019's levels," says Yeo, who has kept a target price of US$3.09 on the stock.

DFI recently announced that Scott Price, formerly WalMart's Asia CEO, is taking over the CEO role from Ian Macleod from Aug 1 onwards.

"We believe there will be tweaks to DFI's business focus and strategy after the new CEO's appointment, and the benefits of teh new plans could time to realise," says Yeo.

RHB expects DFI's recovery to be 'gradual' and not 'firm', keeps 'neutral' call

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