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RHB lifts DFI’s TP to US$2.81 following 1QFY2024 performance

Ashley Lo
Ashley Lo • 3 min read
RHB lifts DFI’s TP to US$2.81 following 1QFY2024 performance
“DFI Retail Group continues to remain as our recovery play as 1QFY2024’s interim performance and outlook tracks in line with our expectations,” says analyst Alfie Yeo. Photo: Bloomberg
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RHB Bank Singapore’s Alfie Yeo has maintained his “buy” call on DFI Retail Group D01 -

(DFI) while increasing his target price from US$2.80 ($3.78) to US$2.81 as he continues to anticipate continued earnings recovery for the company. 

On May 23, DFI released its update for the 1QFY2024 ended March 31, which continued to meet the analyst’s expectations. DFI’s overall revenue increased 2% y-o-y while its underlying profit grew more than 60% y-o-y boosted by better profitability. 

The analyst also adds that despite the decline in DFI’s food retail division’s same-store sale growth (SSSG) due to weaker consumption, it saw margin improvement in cost control. 

Yeo breaks down the performance of the rest of DFI’s segments: The convenience division’s SSSG grew in Macau, South China, and Singapore with margins more than doubled due to better sales mix while the health and beauty division’s SSSG grew in Malaysia, Indonesia, and North Asia with improved margins due to cost control and better gross margins. 

“Among key associates, Maxim’s had flat profit growth, while Yonghui and Robinson’s Retail’s profits grew,” says the analyst. 

Due to DFI’s 1QFY2024 performance being on track with his forecast, the analyst’s estimates remain unchanged. Yeo also notes that management guidance for FY2024’s underlying profit attributable to shareholders remains between US$180 million and US$220 million. 

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“Although growth in 2HFY2024 is expected to normalise given [a] higher base in 2HFY2023, we see continued earnings recovery in FY2024 and beyond, led by improving profitability of key segments, including the food retail division,” adds Yeo. 

While his estimates remain unchanged, the analyst’s increased sum-of-the-parts (SOTP)-based target price is largely attributed to Yonghui’s better share price which has increased by 2% from RMB2.57 (47 cents) to RMB2.63 since the analyst’s previous report dated March 12. With DFI’s 19.9% stake in the company, this increase in Yonghui’s value has positively impacted the analyst’s sum of parts valuation resulting in a slightly higher overall target price for DFI.

Yeo also notes that DFI’s dividend yield remains “decent” following the practice of uplifting dividends back to the group level by its parent company Jardine Matheson Holdings J36 -

. As of now, the stock trades at an attractive 11 times FY2025 P/E in comparison to the analyst’s implied target P/E of 15 times. 

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That said, potential downside risks to DFI’s earnings and margins identified by Yeo include a slower-than-expected recovery in consumer spending and higher-than-expected costs. 

DFI’s environmental, social and governance (ESG) score sits at 3 (out of 4), a slight decrease below the country median of 3.1. As per RHB’s in-house proprietary ESG methodology, the analyst’s target price includes a 2% discount to the intrinsic value. 

As at 11.02am, shares in DFI Retail Group are trading at an unchanged US$1.88. 


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