The company plans to pay a final dividend of 10.5 US cents per share. Coming on top of the bumper special dividend of 44.3 US cents and interim dividend of 3.5 US cents already paid, DFI will be paying a total of 58.3 US cents. In contrast, DFI paid a total of 10.5 US cents for FY2024.
See more: DFI Retail reports underlying profit of US$270 mil for FY2025, up 35% y-o-y
The street is upbeat on DFI’s long-term trajectory and are all keeping their “buy” and “add” calls on the counter.
DBS Group Research has even increased its target price on DFI to US$5.00 from US$4.50 previously.
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Analyst Chee Zheng Feng notes that management comprehensively articulated clear strategic initiatives and financial objectives for each of its operating segments.
Notably, the higher-margin Health & Beauty (H&B) and Convenience businesses are strategically positioned to serve as the primary growth drivers for both revenue generation and overall earnings. The group has set a target of achieving core earnings of US$310 million – US$350 million by 2028, which translates to a CAGR of 6%–10% from its current FY2025 earnings, which came in at the high end of its guidance.
Management also reiterated that acquisitions must support improvements in ROCE and TSR. Potential areas include higher-margin Convenience and H&B. It also flagged interest in “affordable” digital assets, though noted that many such assets are currently trading at high multiples.
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While Chee has raised core operating forecasts, he expects slower FY2026 growth, reflecting lower profits from the Food division following the group’s Food segment exiting the Singapore market. Hence, the segment is now largely Hong Kong-focused.
While Northbound travel remains a headwind, management narrowed the price gap between the Greater Bay Area and Hong Kong to as low as 1% during the lunar new year, which has supported early signs of recovery (2% unit volume growth and 1% footfall increase in FY25). Management also confirmed Ding Dong’s merger with Meituan does not affect the existing partnership.
RHB Group Research’s Alfie Yeo too has increased his target price to US$4.75 from US$4.25 previously. As Yeo keeps a positive stance on the group, he also raises earnings forecast, based on the FY2025 outperformance.
DFI’s earnings outperformance stemmed largely from better-than-expected revenue, comparable operating margins, and higher-than-expected finance and associate income. “We raise our FY2026 - FY2027’s earnings by 2% and 5% on higher operating margin. We re-peg our target valuation from 21x to 23x FY2026 PE – to be in line with our FY2025-FY2028 23% earnings CAGR,” says Yeo, adding that valuation remains reasonable at -0.5SD of the Singapore grocery retail sector’s 28x long-term average forward PE.
“We are of the view that the fund flows will lift valuations over the medium term,” he says.
CGS International on the other hand has raised its target price to US$4.90 from US$4.50. Analysts Meghana Kande and Lim Siew Khee note that management guided for FY2026 underlying profit of about US$270 million – US$300 million, indicating 13%-25% y-o-y growth, excluding divestment impact.
This improvement is likely to be driven by higher margins from an enhanced mix of its own brand and wellness products in H&B and ready-to-eat offerings in Convenience, along with ongoing operational enhancements in the Home segment in FY2026.
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“With one-off SG&A (selling, general and administrative) costs largely subsiding in FY2026, we forecast operating margin of 5.1% (+90 basis points y-o-y), on track to meet its medium-term 5%-7% margin target by FY2028,” say the analysts.
Beyond potential M&A within H&B and Convenience, management mentioned during its FY2025 analyst briefing that it is also exploring inorganic opportunities within the digital space, which Kande and Lim believe could be complementary to DFI’s efforts to position itself as an integrated omnichannel player.
UOB Kay Hian (UOBKH) has the highest target price at US$5.60, a slight jump from US$5.30 previously. Analyst Adrian Loh believes that in a bull-case scenario, DFI could trade up to US$6.65 which is 1SD above its long-term average PE.
The way he sees it, share price catalysts include maintenance of sales momentum for the convenience segment and introduction of higher-margin ready-to-eat products; monetisation of its DFIQ media platform and data from its yuu platform; and acquisitions and/or further divestments that are accretive to ROCE.
While Loh has finetuned FY2026-FY2027 earnings forecasts minimally at less than 0.5%, he expects 19.7% net profit growth for DFI in FY2026, which is at the mid-point of the group’s 13%-25% guidance.
As at 12.00pm, shares in DFI are trading 2.0% higher since the start of the day at US$4.39.
