DFI Retail (SGX:D01) reported 1H25 revenue of US$4.4bn, flattish y-o-y, forming 50% of our FY25F estimates. Revenue was flat y-o-y, as strength in the health & beauty segment was offset by softness in convenience, food, and home furnishing.
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1H25 core earnings came in at US$105mil, up 39% y-o-y.
Earnings growth was largely driven by higher contributions from associates and JVs, primarily due to the exclusion of Yonghui losses (divested in FY24) and improved performance from Robinsons Retail (1 Oct 24 to 30 May 25) and Maxim’s.
Guidance revised with lower revenue growth but higher core earnings.
Management lowered its organic revenue growth guidance from ~2% to 0.5%-1%, reflecting a larger-than-expected decline in footfall driven by reduced cigarette sales. However, it raised its core earnings guidance to US$250-270mil (previously US$230-270mil), maintaining confidence in a stronger 2H25.
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Declared US$0.443 special dividend and US$0.0035 interim dividend.
See DFI Retail's dividends payout dates. While the special dividend was anticipated, its quantum exceeded expectations. Given the sizeable payout, we believe the company is unlikely to pursue major M&A opportunities in the near term and will instead focus on operational efficiencies.
We view this as the right strategy—aligned with our previous assessment that acquisition targets remain richly valued and risky, and that internal execution offers a more reliable path to growth.
Outsized dividends covered by operational cash flow and SG food divestment.
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