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.
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.
