- We remain OVERWEIGHT on Singapore grocery retailers with BUY calls on DFI Retail Group (SGX:D01) and Sheng Siong (SGX:OV8). Top Picks: Sheng Siong for stable earnings growth and DFI Retail for turnaround play.
- - Read this at SGinvestors.io -
- We see growth for DFI Retail driven by the turnaround of Hong Kong and China operations, while Sheng Siong’s growth is expected to be led by new stores.
Sector core FY23 results remained firm.
- - Read this at SGinvestors.io -
- Although our sector’s FY24F-25F earnings revision was negative, that was largely due to the net profit drag from DFI Retail’s JV/associate income. Nonetheless, excluding the latter and one-off expenses, the sector’s core operating profit exceed expectations.
- Sheng Siong showed revenue growth driven by new stores, but operating margins were weaker on lower other income and supplier rebates.
- DFI Retail’s revenue was flat, but margins outperformed, contributed by sales, traffic recovery, and operating leverage at the convenience stores and health & beauty segments.
Sector well placed for growth.
- Read more at SGinvestors.io.
Alfie Yeo RHB Securities Research | https://www.rhbgroup.com/ 2024-03-26
