Stock Report | October 11, 2007 | SGX SYMBOL : D01 | mainboard | Non-CPF approved Dairy Farm International Holdings Ltd |
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INDUSTRY SECTOR Retail
MAJOR MARKET Asia Pacific
Corp Gov. Rating
BT Corp Gov Rating 56
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COMMENT Dairy Farm is part of the Jardine Matheson Group and operates over 3,000 supermarkets, pharmacies, convenience stores, furniture stores and restaurants across Asia. Household brands include Wellcome, Giant, Mannings, 7-Eleven, Cold Storage, Guardian, IKEA and GNC. COMPETITIVE POSITION Dairy Farm is a giant in the Asian consumer retail space. |

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Key Stock Statistics |
Business Description |
Dairy Farm was listed on the SGX Mainboard on 20 February 1991. Dairy Farm is a leading pan-Asian retailer. At 31 December 2005, the Group and its associates operated 3,165 outlets - including supermarkets, hypermarkets, health and beauty stores, convenience stores, home furnishings stores and restaurants; employed some 60,000 people in the region; and had 2005 total sales of US$5.5 billion.
The Group operates under well-known local brands, including:
- Supermarkets - Wellcome in Hong Kong and Taiwan, Cold Storage in Singapore and Malaysia, Giant in Malaysia, Shop N Save in Singapore, Hero in Indonesia and Foodworld in India;
- Hypermarkets - Giant in Malaysia, Singapore and Indonesia;
- Health and beauty stores - Mannings in Hong Kong and China, Guardian in Singapore, Malaysia and Indonesia, Health and Glow in India, and Olive Young in South Korea;
- Convenience stores - 7-Eleven in Hong Kong, Singapore and Southern China, and Starmart in Indonesia; and
- Home furnishing stores - IKEA in Hong Kong and Taiwan
FY2005 Sales Breakdown by Consumer Segment:
- Supermarkets/Hypermarkets: US$2,993m (63%)
- Health & Beauty Stores: US$728m (15%)
- Convenience Stores: US$855m (18%)
- Home Furnishing/Restaurants: US$172m (4%)
Dairy Farm has a 50 percent interest in Maxim's, Hong Kong's leading restaurant chain.
Dairy Farm International Holdings Limited is incorporated in Bermuda and has its primary share listing on the London Stock Exchange, and secondary listings on the Singapore and Bermuda stock exchanges. The Group's businesses are managed from Hong Kong by Dairy Farm Management Services Limited through its regional offices. Dairy Farm is a member of the Jardine Matheson Group. |
Recent Development |
10 Oct 2007- The following notification dated 10th October 2007 in respect of Dairy Farm International Holdings Limited was lodged with the Financial Services Authority in the United Kingdom today:
“DAIRY FARM INTERNATIONAL HOLDINGS LIMITED
2007 INTERIM DIVIDEND AND SPECIAL DIVIDEND
We wish to advise the following Pound Sterling equivalent of the 2007 interim dividend and special dividend of the above Company. The dividends will be paid on 24th October 2007.
2007 interim dividend per share: US cents 3.00 GBP equivalent of 2007 interim dividend per share: 1.4718 pence
Special dividend per share: US cents 16.00 GBP equivalent of special dividend per share: 7.8496 pence
10 May 2007 - Dairy Farm announced the retirement of Owen Price as Director of the company with effect from 10 May 2007.
27 July 2006... Press Release: 1HJun2006 Results:
- EPS up 12% to USD 6.42 cents
- Sales up 8% to US$2,881 million
- Net Profit up 13% to US$86 million
- Interim Dividend up 13% to USD 2.6 cents per share
Simon Keswick, Chairman: "All of Dairy Farm's businesses are trading well and the prospects are positive for the remainder of the year. With a sound base in its major markets, the Group will build scale in its newer operations while remaining open to further geographic expansion as opportunities arise."
Further growth was achieved in South Asia where sales and profit rose by 16% and 12% respectively. Malaysia and Singapore preformed well, and there was continuing improvement in Indonesia. Three new Giant hypermarkets were opened in Indonesia during the first half of the year. There are now 44 Giant hypermarkets in South Asia, and 14 more planned for the second half of the year. In Malaysia, recent approvals for additional outlets provide the opportunity for further growth in the successful hypermarket and health and beauty formats.
In Singapore, 7-Eleven is enhancing its competitive position through a strategic alliance with Shell. The alliance will provide an excellent new source of growth for 7-Eleven as it progressively takes over 65 convenience stores located at Shell petrol stations.
In India, the Group's supermarket and health and beauty businesses opened eight outlets, and have committed increased resources to securing new sites. Remodelled formats in both sectors are already showing robust growth in like-for-like sales and the outlook is encouraging.
In Thailand, Guardian opened seven new stores to finish the first half with ten outlets.
In July 2006, the Group took its first steps in the promising Vietnamese market when it was granted a license to operate as a wholly-foreign owned company. The new venture will begin supermarket operations in the second half. In addition, the Group is to enter Brunei where it will open a Giant hypermarket in 2007.
The Group's operations in North Asia also enjoyed steady growth with sales up 5%. Excluding the significant pre-opening expenses, mainly for the large IKEA store in Hsin Chuang, Taiwan, profit would have increased by 6%. In Hong Kong all major businesses performed well. Wellcome and Mannings produced increased earnings. 7-Eleven, which opened its 700th store in June, maintained its growth in store numbers, sales and profit.
Wellcome Taiwan's results also improved, despite the continuing competitive environment. In Guangdong Province, 7-Eleven maintained its expansion program and had 250 stores in operation at end-June, while Mannings had 11 stores. 7-Eleven will introduce franchising in Guangdong in the second half. In Macau, the new 7-Eleven and Mannings ventures recorded satisfactory results. South Korean associate, Olive Young, opened six health and beauty stores, reaching a total of 31 outlets, and achieved satisfactory gains in like-for-like sales.
IKEA in Hong Kong increased its profit despite a sluggish housing market. In Taiwan, IKEA's sales benefitted from the opening of the large Hsin Chuang store in April, and another store will open in Kaohsiung before year end.
The Group's Hong Kong based restaurant associate, Maxim's, enjoyed a strong profit increase. A recovery in Chinese restaurants, following a restructuring program over the last two years, was complimented by good conditions for Starbucks and the newly acquired Genki Sushi business. |
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Qualitative Risk Assessment |

Dairy Farm has low gearing, strong cash flows, consistent profitability from a diverse array of consumer businesses across Asia, and an impressive financial performance history.
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Quantitative Evaluations |
Consecutive Years Paying Div : 4
Consecutive Years Increase Div : 1 |
| Relative Strength Rank : 0 |
 |
0 |
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| Lowest = 1 |
Highest = 99 |
| One-Year Total Return : 0 % |
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| Revenue (Million
US$ ) |
| |
1Q |
2Q |
3Q |
4Q |
Year |
| 2006 |
- |
2881.0 |
- |
- |
6010.0 |
| 2005 |
- |
2675.0 |
- |
- |
5539.0 |
| 2004 |
- |
- |
- |
- |
5116.0 |
| 2003 |
- |
- |
- |
- |
4499.0 |
| 2002 |
- |
- |
- |
- |
4000.0 |
| 2001 |
- |
- |
- |
- |
3750.0 |

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| Earnings Per Share (
US$ ) |
| 2006 |
- |
0.064 |
- |
- |
0.1570 |
| 2005 |
- |
0.057 |
- |
- |
0.1534 |
| 2004 |
- |
- |
- |
- |
0.1887 |
| 2003 |
- |
- |
- |
- |
0.0933 |
| 2002 |
- |
- |
- |
- |
0.0670 |
| 2001 |
- |
- |
- |
- |
0.0200 |
Dividend Data (cents -
USD ) |
| Year |
Interim |
Final |
Total |
Share Bonus |
| 2004 |
0.0210 |
0.3030 |
0.3240 |
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| 2005 |
0.0230 |
0.0620 |
0.0850 |
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| 2006 |
0.0260 |
0.0620 |
0.0880 |
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| 2003 |
0.0140 |
0.0320 |
0.0460 |
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| 2007 |
0.0300 |
- |
- |
special div: $0.16 |
Office Dairy Farm International Holdings Ltd 7/F Devon House, Taikoo Place 979 King's Road, Quarry Bay Hong Kong PO Box 286, GPO
Telephone (852) 2299 1888 Fax: 2299 4888
Website www.dairyfarmgroup.com
Officers
Ronald J Floto: Chief Executive Officer Howard Mowlem: Group Financial Director Michael Kok: Regional Director, South Asia Ed Chan: Regional Director, North Asia
Board of Directors
Simon Keswick: Chairman A J L Nightingale: Managing Director Ronald J Floto: Managing Director Howard Mowlem: Group Finance Director Jonathan Gould: Director George Joseph Ho: Director Henry Keswick: Director George C G Koo: Director R C Kwok: Director C G R Leach: Director Owen Price: Director (retired 10 May 2007) James Riley: Director Percy Weatherall: Director
Headquarters Hong Kong
Founded 1886
Employees 60,000
Stockholders -
Largest Stockholders (March 2006)
- Jardine Strategic: 78.27%
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Analyst Consensus Opinion |
Companies Offering Coverage |
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Company Financials FY-end :
December |
Per Share Data (
US$ ) |
2006 | 2005 | 2004 | 2003 | 2002 |
| Tangible Book Value |
0.244 | 0.181 | 0.333 | 0.188 | 0.483 |
| Cash Flow |
0.232 | 0.263 | 0.229 | 0.197 | 0.187 |
| Earnings |
0.157 | 0.153 | 0.189 | 0.093 | 0.066 |
| WS Core Earnings |
0.157 | 0.142 | 0.124 | 0.093 | 0.066 |
| Dividends |
0.0940 | 0.0850 | 0.3240 | 0.0460 | 0.0300 |
| Payout Ratio |
59.872 | 60.000 | 260.000 | 49.000 | 45.045 |
| P/E High |
- | - | - | - | - |
| P/E Low |
- | - | - | - | - |
Income Statement Analysis (Million
US$ ) |
  |   |   |   |   |
| Revenue |
6010.0 | 5539.0 | 3956.5 | 3455.0 | 3965.0 |
| Operating Income |
233.8 | 248.5 | 272.8 | 137.0 | 328.5 |
| Depreciation |
110.3 | 103.0 | 89.3 | 97.6 | 104.7 |
| Interest Expense |
21.9 | 25.5 | 8.9 | 10.0 | 12.7 |
| Pretax Income |
255.5 | 251.5 | 285.0 | 144.8 | 358.4 |
| Effective Tax Rate |
- | - | - | - | - |
| Net Income |
211.0 | 204.8 | 250.8 | 250.9 | 342.8 |
| WS Core Earnings |
211.0 | 190.3 | 165.0 | 250.9 | 342.8 |
Balance Sheet & Other Financial Data (Million
US$ ) |
  |   |   |   |   |
| Cash |
442.0 | 389.0 | 454.6 | 163.0 | 606.9 |
| Current Assets |
1135.0 | 974.5 | 1005.2 | 579.4 | 948.2 |
| Total Assets |
2126.6 | 1833.0 | 1770.3 | 1444.0 | 1725.6 |
| Current Liabilities |
1300.4 | 1185.0 | 1028.5 | 895.0 | 755.0 |
| Long Term Debt |
389.5 | 352.0 | 261.5 | 261.8 | 205.9 |
| Common Equity |
324.0 | 224.0 | 444.6 | 249.0 | 738.0 |
| Total Capital |
2126.6 | 243.0 | 444.7 | 250.0 | 1725.6 |
| Capital Expenditures |
156.6 | 112.0 | 93.1 | 91.5 | 118.4 |
| Cash Flow |
312.2 | 351.5 | 304.9 | 268.5 | 286.3 |
| Current Ratio |
0.8 | 0.8 | - | - | 1.2 |
| % Long Term Debt of Capitalization |
18.3 | 144.9 | 58.8 | 104.7 | 11.9 |
| % Net Income of Revenue |
3.5 | 3.7 | 6.3 | 7.3 | 8.6 |
| % Return on Assets |
9.9 | 11.2 | 14.2 | 17.4 | 19.9 |
| % Return on Equity |
65.1 | 91.4 | 56.4 | 100.8 | 46.4 |
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