Dairy Farm

(23-01-2014, 09:59 PM)InvestArk Wrote: ROE can be tweaked by incurring huge leverage over equity. Please pay the necessary caveat when doing such analysis

Agreed.

DFIH's ROE is in the 50s, really really high due to their debt levels.

If we use ROIC however, DairyFarm's at 27.32%, and their latest WACC is 5.6%. So they're still very profitable with about S$300m in free cash flow.

However they didn't raise dividends, it stayed at 23c (same as 2012), hopefully the currency rout afflicting their ASEAN operations won't get worse. They've took a huge hit (and that's how I got in) not long ago.

They've been expanding into Vietnam/Cambodia recently, and with the increased heated exchange between Vietnam & China, that could be bad news for DF's new ventures.

Vested.

can someone enlighten me about the leverage issue?

i thought the balance sheet is pretty strong with net cash to equity of 46% (or debt to equity of 6.6% only) and its cash flow from operations is twice its capex needs every year.. i thought high leverage ratio is normal for fast retailers/groceries like DF due to their high asset turnover and low net margin? the median leverage ratio for global peers is 2.8x, the company's is 3.2x

also just curious, what will be the terminal growth and WACC that you will assign for this kind of company?

thanks...

Dairy Farm expanded into China...

(not vested)

Dairy Farm buys China Yonghui Superstores stake for $1.2 billion

Dairy Farm International Holdings, an operator of supermarkets and retail stores, is buying a 20% stake in Yonghui Superstores Co. for 5.69 billion yuan ($1.2 billion) as it seeks to tap China’s growing market.

“Dairy Farm has for some time been looking for opportunities to participate in the large and high growth Chinese market,” Graham Allan, chief executive officer of Dairy Farm, said in a statement to the London Stock Exchange today. “This strategic partnership with Yonghui provides an attractive way to do that.” Dairy Farm has a secondary listing in Singapore.

Dairy Farm, which runs more than 5,800 supermarkets and health and beauty stores as well as other retail outlets across Asia, will also collaborate Yonghui in areas including procurement, fresh food processing and store development, according to the statement. Yonghui Superstores operated 288 hypermarkets and supermarkets across 17 provinces as of end-2013, it added.

The deal is Dairy Farm’s largest acquisition ever, according to data compiled by Bloomberg. Fujian province-based Yonghui is China’s fifth-largest hypermarket company with a 4.6% market share last year, according to data from industry researcher Euromonitor International.

China Resources Enterprise and Groupe Auchan SA, which owns a stake in Sun Art Retail Group Ltd., are the country’s largest with 14% each, Euromonitor said.
http://www.theedgesingapore.com/the-dail...llion.html

This bunch of Hongs are no ordinary blokes - with their complicated cross-holdings structure and being Taipans since the Opium war days... they must have scouted extensively before ending up with such a deal... no worries... have faith in them...

(12-08-2014, 09:49 AM)CityFarmer Wrote: Dairy Farm expanded into China...

(not vested)

Dairy Farm buys China Yonghui Superstores stake for $1.2 billion

Dairy Farm International Holdings, an operator of supermarkets and retail stores, is buying a 20% stake in Yonghui Superstores Co. for 5.69 billion yuan ($1.2 billion) as it seeks to tap China’s growing market.

“Dairy Farm has for some time been looking for opportunities to participate in the large and high growth Chinese market,” Graham Allan, chief executive officer of Dairy Farm, said in a statement to the London Stock Exchange today. “This strategic partnership with Yonghui provides an attractive way to do that.” Dairy Farm has a secondary listing in Singapore.

Dairy Farm, which runs more than 5,800 supermarkets and health and beauty stores as well as other retail outlets across Asia, will also collaborate Yonghui in areas including procurement, fresh food processing and store development, according to the statement. Yonghui Superstores operated 288 hypermarkets and supermarkets across 17 provinces as of end-2013, it added.

The deal is Dairy Farm’s largest acquisition ever, according to data compiled by Bloomberg. Fujian province-based Yonghui is China’s fifth-largest hypermarket company with a 4.6% market share last year, according to data from industry researcher Euromonitor International.

China Resources Enterprise and Groupe Auchan SA, which owns a stake in Sun Art Retail Group Ltd., are the country’s largest with 14% each, Euromonitor said.
http://www.theedgesingapore.com/the-dail...llion.html

Jardine 2nd big investment in china after the PRC car dealership investment, Zhongsheng

Dairy farm dropping for the past two days.
Does anyone knows why?
There is some uncertainty about Fed interest rates, but since DF has little debt, it shouldn't affect?

(16-09-2014, 03:04 PM)gzbkel Wrote: Dairy farm dropping for the past two days.
Does anyone knows why?
There is some uncertainty about Fed interest rates, but since DF has little debt, it shouldn't affect?

I think the uncertainty surrounding scotland independence ba, the keswicks are scottish the company incorporated in bermuda which is british overseas territory they have a main listing on london stock exchange I think nobody knows really what the implications

Whole mkt is dropping... blood on SGX...

Will it affect Dairy Farm's business?

(16-09-2014, 03:22 PM)sgd Wrote:

(16-09-2014, 03:04 PM)gzbkel Wrote: Dairy farm dropping for the past two days.
Does anyone knows why?
There is some uncertainty about Fed interest rates, but since DF has little debt, it shouldn't affect?

I think the uncertainty surrounding scotland independence ba, the keswicks are scottish the company incorporated in bermuda which is british overseas territory they have a main listing on london stock exchange I think nobody knows really what the implications

(16-09-2014, 04:02 PM)greengiraffe Wrote: Whole mkt is dropping... blood on SGX...

Will it affect Dairy Farm's business?

(16-09-2014, 03:22 PM)sgd Wrote:

(16-09-2014, 03:04 PM)gzbkel Wrote: Dairy farm dropping for the past two days.
Does anyone knows why?
There is some uncertainty about Fed interest rates, but since DF has little debt, it shouldn't affect?

I think the uncertainty surrounding scotland independence ba, the keswicks are scottish the company incorporated in bermuda which is british overseas territory they have a main listing on london stock exchange I think nobody knows really what the implications

of course not affect but the market dropping anyway

The company share is reacting to market, both drop around 1-2%. The company share price was around US$9, around 6 months ago.

Adjustment of 1-2%, is just a minor adjustment, I don't expect to see blood yet.

(not vested)