Retailer Dairy Farm International’s FY2015 were within DBS Vickers’ expectations even though overall performance was lacklustre.The broker does not foresee changes to its forecasts.
Revenue was supported by North Asia, but this was offset by decline in sales in East Asia (Malaysia, Indonesia, Vietnam and Brunei),dragged by Malaysia’s weak consumption and currency.
The broker notes that the firm’s balance sheet is now in net debt position of US$482 million ($662 million) on financing raised for the Yonghui acquisition versus net cash of US$475 million in FY14.
The company is expected to continue to invest in new and existing stores, strengthen its brands, improve operations and enhance shopper experience across all formats. These initiatives, DBS Vickers says, will incur costs. That said, investors can take comfort from the US$700 million cash generating capability funded by its suppliers.
Dairy Farm’s dividend payout was in line with the 59-69% range between FY09 and FY14.
At current valuation of 19x FY16F PE, the broker feels valuations are attractive. It is below Asean grocery retail peers, which are trading at an average of 23-25x.
DBS Vickers maintains a “buy” on the stock, with a price target of $7.03 (down from $7.34 previously).
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Revenue was supported by North Asia, but this was offset by decline in sales in East Asia (Malaysia, Indonesia, Vietnam and Brunei),dragged by Malaysia’s weak consumption and currency.
The broker notes that the firm’s balance sheet is now in net debt position of US$482 million ($662 million) on financing raised for the Yonghui acquisition versus net cash of US$475 million in FY14.
The company is expected to continue to invest in new and existing stores, strengthen its brands, improve operations and enhance shopper experience across all formats. These initiatives, DBS Vickers says, will incur costs. That said, investors can take comfort from the US$700 million cash generating capability funded by its suppliers.
Dairy Farm’s dividend payout was in line with the 59-69% range between FY09 and FY14.
At current valuation of 19x FY16F PE, the broker feels valuations are attractive. It is below Asean grocery retail peers, which are trading at an average of 23-25x.
DBS Vickers maintains a “buy” on the stock, with a price target of $7.03 (down from $7.34 previously).
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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