Dairy Farm

Dairy Farm: FY12 earnings missed estimates by 16%; revenues up 7% to US$9.8b, earnings declined 6.5% to US$453.3m, mainly due to the reversal of a US$59m profit of supplier income in Malaysia that had been incorrectly recognized in the past few years. No further details have been given about the reversal, except that the Group stated that investigation is currently being done, and the US$59m is the full adjustment required for the past years. Adjusted underlying profit increased 13%. Dairy Farm continues to be the leading Asian retailer operator for supermarkets, hypermarkets, health and beauty stores, convenience stores and home furnishings stores. Besides expanding the number of stores around the region, 2012 saw the Group investing a 70% stake in the Lucky supermarket business in Cambodia, and a 50% stake in Rustan's supermarkets and hypermarkets in Philippines. Group's cash position increased 10% to US$521m. A dividend of US16.5¢/ share declared, bringing full-year total to US23¢; indicative yield of 2.1% for the FY12 (increased 10% from FY11). The retail consortium trades at 37.6x trailing P/E.