DFI Retail Group

@ongweehiang
- Besides Giant/Cold Storage, if we do some scuttlebutt on Guardian, i would say the revamp (brighter lights, makeup kiosks and prices of a few SKUs that I tried buying) looks to be in progress and I would put Guardian into the same basket as Giant/Cold Storage. Of course, Watson looks to be doing similar stuff (and when one finds a Guardian, there is always a Watson nearby).

- Unfortunately with borders closed, there isn't a good way to check how Mannings/YH etc pan out. You have made a very good point on "turnaround theory for a conglomerate". I wouldn't use the word "fortitude" on Management though Make no mistake that the Kewicks are in charge here and from their track record, they are collectors of businesses, not asset recyclers.

- There is the sexy allure of a turnaround, together with tailwinds for a Covid-19 recovery (in the near future) and the middle class gaining ground in SEA (medium term). But retail is evolving and changing customer habits are very destructive for value investors.

- Focusing on what is going to change, is highly uncertain. Focusing on what will not change is less risky. What doesn't change? Customers yesterday, today and tomorrow want good quality and value for money. They want convenience. They want to have a good shopping experience. Will DFI be able to provide all these?


@specuvestor
- There were plans to do an IPO before Temasek came in. You just have to give it to the super(old)man lah. When superman sells, you don't buy. Scars from HPT shouldn't be going away, even though it has already been 10 years.

yes IPO or direct sale to Temasek, his timing is +/- 6 months roughly Watch what he do rather than what he says is what I am insinuating. But so far it seems his foray into EU might be pre-mature

Sorry to digress but I thought it's interesting between two old "taipans" Hutch and Jardine

A Covid Zero is only economically feasible if HK has open borders with the rest of China. Getting HK opened up to China using whatever it takes, is probably the only way out. The recovery for DFI's Mannings and Maxim's are critically dependent on this.

Hong Kong faces worst of both worlds as Omicron ruins Covid Zero

Residents can no longer go to the gym or the cinema, and the once-ubiquitous banquets where people gathered to celebrate the Chinese New Year were cancelled for another year.

While the arrival of omicron and a looming vaccine requirement to enter most public venues has spurred demand over the past week, the shuttering of vaccine centers has made it difficult to get an appointment. The government is not pushing it. The mandate will only go into force on Feb 24.

A major reason Hong Kong officials have been so focused on eliminating Covid is to reopen the mainland border, its most crucial economic link.  The arrival of omicron threw a wrench into plans to restart free movement, with chief executive Lam saying this week that talks won’t resume until the omicron situation in Hong Kong comes under control. 

https://www.businesstimes.com.sg/governm...covid-zero

Somehow, I suspect DFI as a covid-19 recovery, is dependent on what happens at HK - And things are not looking good.

Hong Kong Covid isolation could last until 2024: EU Chamber of Commerce

Hong Kong's zero-tolerance approach to Covid-19 could keep the Asian financial hub cut off from most of the world until 2024 and fuel a large-scale exodus of international workers and executives, according to a draft report by the European Chamber of Commerce in the city.

The most likely scenario for Hong Kong's exit from its isolation is to wait for China to finish developing a powerful messenger RNA vaccine and immunise its 1.4 billion people, the business group said in an internal document seen and verified by Bloomberg.

https://www.businesstimes.com.sg/governm...f-commerce

The Grocery business seems to have a turnaround, but the others are still not clicking and HK doesn't look good with Omicron+CovidZero. Yonghui is now struggling (but have no choice) and have to match to internet giants whom have low cost capital with an appetite for losses.

This is probably going into the "too hard" pile.

DAIRY FARM INTERNATIONAL HOLDINGS LIMITED 2021 PRELIMINARY ANNOUNCEMENT OF RESULTS

Highlights
- Underlying net profit for the Group’s subsidiaries (excluding government support) up 35%
- Group underlying profit of US$105 million compared with US$276 million in 2020
- Group’s results significantly impacted by US$90 million share of Yonghui’s losses
- Continued progress in multi-year transformation
- Strong underlying Grocery Retail performance

DiaryFarm FY21: https://links.sgx.com/FileOpen/DFIH.ashx...eID=705942

Yonghui's struggles:
https://kr-asia.com/struggling-yonghui-s...tal-retail
https://www.producereport.com/article/yo...me-listing

Don't know what's happening in China, but if you are a Singaporean and you like to spend time walking grocery stores, you can tell that there is something very wrong with Cold Storage and Giant Singapore. Their shelves are a mess and often empty or under-replenished. It wasn't like this 10 years ago when CS still offered a delightful shopping experience. And to report a dull set of results when your competitors are raking it in says a lot. What happened? With supply-chain issues expected to remain challenging for the foreseeable future, I do not expect CS Singapore to do better.

On the other hand, Sheng Siong never stopped building momentum since they were listed. And clearly they have toppled the giant listed competitor. Simply amazing.

DFI's troubles in China may certainly have relation to the poor performance of its SG operations. But if you are in SG, it is also difficult for you to 'walk the stores' and figure out how they are doing, vis-a-vis their competitors, from time to time.

(07-03-2022, 08:43 PM)karlmarx Wrote: Don't know what's happening in China, but if you are a Singaporean and you like to spend time walking grocery stores, you can tell that there is something very wrong with Cold Storage and Giant Singapore. Their shelves are a mess and often empty or under-replenished. It wasn't like this 10 years ago when CS still offered a delightful shopping experience. And to report a dull set of results when your competitors are raking it in says a lot. What happened? With supply-chain issues expected to remain challenging for the foreseeable future, I do not expect CS Singapore to do better.

On the other hand, Sheng Siong never stopped building momentum since they were listed. And clearly they have toppled the giant listed competitor. Simply amazing.

DFI's troubles in China may certainly have relation to the poor performance of its SG operations. But if you are in SG, it is also difficult for you to 'walk the stores' and figure out how they are doing, vis-a-vis their competitors, from time to time.

"DFI's troubles in China may certainly have relation to the poor performance of its SG operations."

In my view, this is unlikely. There is little chance that the Chinese owners of Yonghui would allow a 20-30% minority foreigner teach them how to conduct daily supermarket operations.

What is interesting is what exactly is the consumption that the internet giants are pulling away from China supermarkets? 

Fresh produce? - Unlikely I guess?
Daily consumables? - More likely I guess? So I guess the Chinese consumer is increasingly buying his toilet paper and the likes from PDD and Taobao and at a cheaper price.

Speaking of fresh produce, besides the well-known giants, there are other competitors springing up too. China is moving at breakneck speed.

Investors show no appetite for Chinese online grocery firms that just listed in the U.S.
https://www.cnbc.com/2021/06/30/chinese-...h-ipo.html

Missfresh Expands China-wide Direct-Supply Vegetable Farm Network to Total More Than 1,300 Hectares
https://en.prnasia.com/releases/global/m...3263.shtml

https://ir.missfresh.cn/

Rather than DFI teaching Yonghui how to operate, why not learn and cooperate?

Jardine is no stranger in taking minority interests or entering into JV. In fact, a large number of its businesses operate in this manner. China property crisis actual say a lot about HongKong Land partners selection for their development and investment property JVs in China and HongKong Land CEO sound pretty proud about it.

Anyway DFI FY21 financials is qualified because of Yonghui.

hi weijian,

Sheng Shiong is quite unusual to have improving margins these few years. The other companies that I follow (and unfortunately own) tend to have worsened margins due to increased material and labor costs.
Good point about the benefits of the free float!

Do you know why Dairy Farm and Sheng Shiong have such different results over the last several years? Dairy Farm should have similar strengths such as negative working capital and economies of scale.