Stock Report | October 11, 2007 | SGX SYMBOL : D01 | mainboard | Non-CPF approved
Dairy Farm International Holdings Ltd
12% DCF Rating Price
US$ 4.580
(as of July 04, 2008)
12% DCF Estimate
US$ 2.034
INVESTMENT STYLE
Large Cap

INDUSTRY SECTOR Retail
MAJOR MARKET Asia Pacific
Corp Gov. Rating


BT Corp Gov Rating 56

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

52-Wk Range US$4.100-2.980
Trailing 12-Mth EPS 0.157
Trailing 12-Mth PE 24.2

Common Shares Outstg. (mil) 1,347.0
Market Capitalization (mil) 5,119.0
Institutional Ownership (%) 0
Div Rate/Sh 0.0880
Div Yield (%) 2.3

Price Performance

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.

Related News

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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.

Quantitative Evaluations

WS Earnings Grade :
D C B- B B+ A- A A+

Consecutive Years of EPS Growth : 1
WS Dividend Rank :
Consecutive Years Paying Div : 4
Consecutive Years Increase Div : 1
Relative Strength Rank : 0
0
Lowest = 1
Highest = 99
One-Year Total Return : 0 %

REVENUE/EARNINGS DATA

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

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
2005
0.0230
0.0620
0.0850
2006
0.0260
0.0620
0.0880
2003
0.0140
0.0320
0.0460
2007
0.0300
-
-
special div: $0.16

Corporate Information

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%

Analyst Consensus Opinion

no opinion

Companies Offering Coverage

-- to be updated --

Consensus vs Performance

-- to be updated --

Company Financials FY-end : December

Per Share Data ( US$ )
20062005200420032002
Tangible Book Value 0.2440.1810.3330.1880.483
Cash Flow 0.2320.2630.2290.1970.187
Earnings 0.1570.1530.1890.0930.066
WS Core Earnings 0.1570.1420.1240.0930.066
Dividends 0.09400.08500.32400.04600.0300
Payout Ratio 59.87260.000260.00049.00045.045
P/E High -----
P/E Low -----

Income Statement Analysis (Million US$ )
     
Revenue 6010.05539.03956.53455.03965.0
Operating Income 233.8248.5272.8137.0328.5
Depreciation 110.3103.089.397.6104.7
Interest Expense 21.925.58.910.012.7
Pretax Income 255.5251.5285.0144.8358.4
Effective Tax Rate -----
Net Income 211.0204.8250.8250.9342.8
WS Core Earnings 211.0190.3165.0250.9342.8

Balance Sheet & Other Financial Data (Million US$ )
     
Cash 442.0389.0454.6163.0606.9
Current Assets 1135.0974.51005.2579.4948.2
Total Assets 2126.61833.01770.31444.01725.6
Current Liabilities 1300.41185.01028.5895.0755.0
Long Term Debt 389.5352.0261.5261.8205.9
Common Equity 324.0224.0444.6249.0738.0
Total Capital 2126.6243.0444.7250.01725.6
Capital Expenditures 156.6112.093.191.5118.4
Cash Flow 312.2351.5304.9268.5286.3
Current Ratio 0.80.8--1.2
% Long Term Debt of Capitalization 18.3144.958.8104.711.9
% Net Income of Revenue 3.53.76.37.38.6
% Return on Assets 9.911.214.217.419.9
% Return on Equity 65.191.456.4100.846.4

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