Growth eludes Dairy Farm as ASEAN consumption falters

Is there a silver lining for the retail giant?

Dairy Farm will continue to grapple with lacklustre regional demand as FY16 rolls in, according to a report by RHB.

The multinational retailer has been impacted by weak ASEAN consumption, which was compounded by the persistent weakness of regional currencies.

RHB noted that although these threats will continue to hound Dairy Farm, the company is nonetheless supported by its track record of steady growth and its consistent dividend payouts.

"The company has a track record of steady growth, with net profit never declining for two years in a row since 2000. In the meantime, current dividends are sustainable and would provide a cushion to its share price," said the report.

RHB also said that its investment into China's Yonghui will provide Dairy Farm with a more meaningful foothold into the Mainland.

"Its ongoing investment in Yonghui will provide a platform to grow further into China," said RHB.

"We believe that its ongoing initiative to drive organisation-wide business synergies could produce gains over the medium term. This remains on track, including the standardisation of back-end supply chains and IT systems, more private label products and introduction of new fresh food distribution centres in Singapore and Malaysia," the report added.  

Visit Singapore Business Review website for other stories.
Penilaianmu: MagBe