"We stay cautious on a more aggressive recovery until DFI's key markets' domestic supermarket consumption and China outbound tourist numbers pick up."
Yeo notes that while DFI enjoyed better performance from its health and beauty and convenience store operations, the grocery and home furnishing segments remain "relatively poor".
He points out that just 2.8 million mainland Chinese visited Hong Kong in May - far below the pre-pandemic levels of between 4 and 5 million a month.
In Singapore, Yeo warns that there's a risk of "downtrading" from higher-end grocery segments, because of a less rosy outlook of the broader economy. DFI's Cold Storage supermarket chain in Singapore is seen as more upmarket versus those perceived as more mass market, namely, those run by the Sheng Siong Group .
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"We anticipate a gradual rather than firm earnings recovery towards 2019's levels," says Yeo, who has kept a target price of US$3.09 on the stock.
DFI recently announced that Scott Price, formerly WalMart's Asia CEO, is taking over the CEO role from Ian Macleod from Aug 1 onwards.
"We believe there will be tweaks to DFI's business focus and strategy after the new CEO's appointment, and the benefits of teh new plans could time to realise," says Yeo.
