- We saw a 9% one-day spike of DFI Retail Group's share price on 24 Sep 24, after DFI's announcement that the entire Yonghui stake is to be sold to Miniso Group for ~US$635mil.
Sharp rally on announcement of sale of Yonghui stake.
- - Read this at SGinvestors.io -
- We believe DFI's share price has more room to run, for three key reasons:
- Implications of Yonghui’s transaction is not fully priced in by the market,
- - Read this at SGinvestors.io -
- its valuation remains attractive.
How do we see the Yonghui sale proceeds flowing through in terms of financials?
Proceeds to be allocated to organic growth, debt repayment, dividend growth, and other corporate actions in order of priority.
- Assuming a more aggressive expansion stance (i.e. possibly convenience store expansion) and debt repayment, we lifted our capex expectation to US$270mil (previously: US$216mil) and debt repayment to US$550mil (previously: US$150mil) in FY25F.
- Accordingly, we estimate that DFI could see US$19mil in interest savings.
Raised FY25F core earnings by 18% from US$220mil to US$259mil on lower interest costs and exclusion of Yonghui’s losses.
- Read more at SGinvestors.io.
Above is the excerpt from report by DBS Group Research.
Clients of DBS may access the full report in PDF @ https://www.dbs.com/insightsdirect/.
Zheng Feng CHEE DBS Group Research | Andy SIM CFA DBS Research | https://www.dbs.com/insightsdirect/ 2024-09-26
Previous report by DBS:
2024-08-05 DFI Retail Group - Early Signs Of Transformation Progress Encouraging.
Price targets by 2 other brokers at DFI Retail Target Prices.
Listing of research reports at DFI Retail Analyst Reports.
Relevant links:
DFI Retail Share Price History,
DFI Retail Announcements,
DFI Retail Dividends & Corporate Actions,
DFI Retail News Articles
