To recap, DFI on Oct 30 announced its 3QFY2025 ended September business update which reported underlying profit rose 48% y-o-y, driven by a 23% y-o-y increase in operating profit, lower financing costs and higher associates’ contribution after divesting Yonghui (in Feb 2025) and Robinsons Retail (May 2025).
Sales momentum picked up in 3QFY2025, growing 3% y-o-y (excluding cigarettes), compared to flat y-o-y in 1HFY2025. DFI’s food and health & beauty segments were key drivers of the sales growth.
Food segment like-for-like (LFL) sales were up 3% y-o-y, primarily on stronger sales in Singapore from the government’s voucher disbursement, which, alongside better profitability in Hong Kong, contributed to the doubling of operating profit in 3QFY2025 y-o-y. The health & beauty segment saw LFL sales and operating profit grow 5% and 7% y-o-y, respectively, in line with the analysts’ expectations.
Meanwhile, convenience segment sales (excluding cigarettes) were stable y-o-y on a LFL basis while network expansion of 7-Eleven in China and shift in sales mix towards ready-to-eat products supported profit growth in 3QFY2025. The home furnishing segment sales trend in Hong Kong and Taiwan improved and profit was aided by cost controls.
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DFI maintained its FY2025 underlying profit guidance at US$250 million-US$270 million, which implies 16%-32% y-o-y growth in 2HFY2025 (or 3%-17% y-o-y excluding Yonghui and Robinsons).
“We think this is conservative in light of DFI’s profit momentum in 3QFY2025 and the seasonally stronger 4QFY2025, particularly due to a later mid-Autumn festival versus 2024, which should partially push Maxim’s mooncake sales into 4QFY2025. Accordingly, we now expect FY2025 underlying profit to be US$278 million (previously US$263 million),” say Kande and Lim, while raising their FY2026-FY2027 net profit forecasts by 6%-7%, underpinned by DFI’s stringent cost controls and improving Hong Kong supermarket profitability.
However, they note that the sale of the Singapore food business, scheduled to be completed by end-2025, is likely to dampen growth as they expect a turnaround in profitability.
As at 2.50pm, shares in DFI are trading 3.4% lower at US$3.39.
