Alfie Yeo of RHB Bank Singapore has kept his "buy" call on DFI Retail Group along with a higher target price of US$2.79 from $2.70, with expectations that the operator of supermarkets and convenience stores will show further earnings recovery this current FY2024 on top of improvements reported for FY2024.
DFI Retail reported slightly lower revenue for FY2024 but earnings improved with better operating margins thanks to a better sales mix, cost controls and store portfolio optimisation.
A final dividend of 7 US cents was declared, which will bring full-year FY2024 payout to 10.5 US cents, equivalent to 70% of DFI Retail's core earnings.
"Dividend yield is decent due to parent company Jardine Matheson Holdings ’ practice of uplifting dividends back to group level," states Yeo in his March 13 note.
Yeo, citing margin expansion and further earnings improvement, raised his FY2025 and FY2026 earnings projections by 2% and 3% respectively.
The management, according to Yeo, expects core earnings growth of 15% y-o-y for FY2025, leading to a 3% lift in his target price, which represents an upside of around 23%.
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DFI Retail Group shares changed hands at US$2.27 as at 4.28 pm, up 0.89% for the day but down 1.3% year to date.
