Dairy Farm

[TTTI]

Sharing my views and analysis of Dairy Farm. Comments are greatly welcomed.

Thanks for sharing this.
Too bad I'm not vested or nor am I currently looking at DF.
Would be great if we had more people doing up, and sharing in depth analysis of more companies like what u had done, that'd be more productive for everyone.



https://thumbtackinvestor.wordpress.com/

[Greenrookie]

I have followed the company for a while, as competitor of vested Sheng Siong. I would like to share few points here, on top of the previous posts on the topic.

DairyFarm went thru a re-org, both in management team, and org structure in 2013. Graham Allen replaced Michael Kok as CEO then, and several key staff changes around the same time. I am not suggesting that, the poor performance of the company after 2013, is due to the changes, but it might be a contributing factor.

The key in the re-org then, was standardization, IMO. The focus on fresh product, was also in the plan, IIRC. Anyway, changes were done. From 2013-2015, gross margin remains about the same, while net margin reduces from 4.6% to 3.8%. Standardization might be the key reason for the failure of non-Asian retailer in Asia market, IMO

The focus on fresh product, didn't improved the gross margin after 2 years. The staff and rental costs are the two factors blamed for the poorer net margin, while other retailers are having similar challenges.

The China venture with Yonghui, has little short-term synergy. It might help the company on its fresh product strategy, which Yonghui has excelled, but it will take time, and execution.

(not vested, but sharing few points on the topic)

P/S: no detail was given for the company 1Q2016 result, but generally situation remains the same, based on the report's summary.

CF, 

What is standardization? Sorry, didn't really follow the company 

All the brands under diary farm selling the same products catering to the same market?

[CityFarmer]

I have followed the company for a while, as competitor of vested Sheng Siong. I would like to share few points here, on top of the previous posts on the topic.

DairyFarm went thru a re-org, both in management team, and org structure in 2013. Graham Allen replaced Michael Kok as CEO then, and several key staff changes around the same time. I am not suggesting that, the poor performance of the company after 2013, is due to the changes, but it might be a contributing factor.

The key in the re-org then, was standardization, IMO. The focus on fresh product, was also in the plan, IIRC. Anyway, changes were done. From 2013-2015, gross margin remains about the same, while net margin reduces from 4.6% to 3.8%. Standardization might be the key reason for the failure of non-Asian retailer in Asia market, IMO

The focus on fresh product, didn't improved the gross margin after 2 years. The staff and rental costs are the two factors blamed for the poorer net margin, while other retailers are having similar challenges.

The China venture with Yonghui, has little short-term synergy. It might help the company on its fresh product strategy, which Yonghui has excelled, but it will take time, and execution.

(not vested, but sharing few points on the topic)

P/S: no detail was given for the company 1Q2016 result, but generally situation remains the same, based on the report's summary.

CF, 

What is standardization? Sorry, didn't really follow the company 

All the brands under diary farm selling the same products catering to the same market?

I reckon, no formal definition. It means generalizing process/layout/promotion, to minimize cost with scale. Your suggestion, is one of the means, to maximize economic-of-scale on procurement.

(not vested)

[Choon]

Audio webcast of FY2015 results here (http://webcast.irasia.com/dairyfarm/annu...chived.php). Reveals some parts of DF's new strategy under new CEO as well as his retail philosophy.

As common in company restructurings/revamps, I believe there will be short-term pain and cost that DF has to bear (and for more than one or two years) before actions bear fruits. The important and uncertain thing is whether the pain and cost that is incurred re-positions the company stronger for the long-term. And this is where as outsider investors, we have fun in making the judgement call (potentially stronger future vs current share price).

Choon
http://commonMcommonS.wix.com/wisdom

[CityFarmer]

Audio webcast of FY2015 results here (http://webcast.irasia.com/dairyfarm/annu...chived.php). Reveals some parts of DF's new strategy under new CEO as well as his retail philosophy.

As common in company restructurings/revamps, I believe there will be short-term pain and cost that DF has to bear (and for more than one or two years) before actions bear fruits. The important and uncertain thing is whether the pain and cost that is incurred re-positions the company stronger for the long-term. And this is where as outsider investors, we have fun in making the judgement call (potentially stronger future vs current share price).

Choon
http://commonMcommonS.wix.com/wisdom

Thank for the link. Let me share my view, as another outsider.

The so-call restructurings/revamps, started more than 2 years ago, is more of sustaining changes, rather than a disruptive one. I reckon, the "restructurings/revamps" have taken too long for fruitful results, from an outsider investors perspective.

There are nothing wrong in the strategy. Enhancing the use of IT technology is necessary, and higher participation of fresh product, is a market trend. I am more concern on the execution. Retail biz is volatile, due to macro environment, and event-driven customer needs. Agility to tackle short to mid-term changes, is an important moat of retailer. Base on the observation as outsider, the company has been lacking in tackling macro changes, and changes in customer behavior.

DF is still a good company, with its leading multi-format sales, and geographical coverage in the region. The only lacking format, is probably the e-commerce. Fresh product mix ratio isn't disclosured. It should be very similar as in 2013, when the current team has taken over the driver seat, simply from gross margin figures. The current effort to improve direct-sourcing and IT tech investment, should be on fresh product supply chain. DF is mature enough to do that already for other products. Good handing of fresh product, needs more than just direct-sourcing and technologies, obviously.

What is the outlook? IMO, it depends on the execution. The management is moving on right direction, IMO. The partnership with YongHui, will enable the company to improve its mix ratio of fresh product, thus improve the gross margin, and offset the heightening cost. One venture of YongHui partnership, is to explore the OTO (online-to-offline) model. Once proven viable, DF can enhance its e-commerce format, which is current pretty weak, IMO.

(not vested, and observing)

[palantir]

I have recieved a letter informing to select my option to recieve the dividend (payable on 16 Oct 16) in Singapore Dollar or United States dollar

Which option has the better exchange rate? Recieve the cheque is Singapore dollar and deposit into my local bank account. Or still remain to recievd the cheque is United States dollar and deposit into my local bank account and let UOB to convert  into SingDollar for me?

[TTTI]

I have recieved a letter informing to select my option to recieve the dividend (payable on 16 Oct 16) in Singapore Dollar or United States dollar

Which option has the better exchange rate? Recieve the cheque is Singapore dollar and deposit into my local bank account. Or still remain to recievd the cheque is United States dollar and deposit into my local bank account and let UOB to convert  into SingDollar for me?

prob receiving it in SGD is better.

Receiving in USD is for those who maintain USD denominated accounts.

[owq]

I have recieved a letter informing to select my option to recieve the dividend (payable on 16 Oct 16) in Singapore Dollar or United States dollar

Which option has the better exchange rate? Recieve the cheque is Singapore dollar and deposit into my local bank account. Or still remain to recievd the cheque is United States dollar and deposit into my local bank account and let UOB to convert  into SingDollar for me?

The rate I got for the previous dividend was 1.3484. This time I'm lazy to put postage and mail it back. Really don't think it matters much unless you have significant holdings.

[soros]

If you are resident in Singapore with S$ bank account , you should select dividend payment in S$.

If you try to pay in a US$ cheque into a S$ acccount, you may have to pay an administration charge plus unfavourable exchange rate.

[corydorus]

I notice this counter spike with very low volume. Not sure fundamental has changed. I will be wary to go in for new position.