Dairy Farm

Dairy Farm: CIMB initiaites Coverage with OutPerform Call and US$12.00 TP. House note that Dairy Farm achieved 12% sales CAGR during 2008-11, higher than peers average of 8%. With accelerating income growth, rapid urbanisation and room to grow for the modern format, its ASEAN markets provide the foundation for group’s next phase of growth. In particular, Indonesia offers enormous potential with a very high proportion of traditional stores and favourable population demographics. Moreover, successful penetration into the new markets would secure the group’s growth beyond this decade. House expect Dairy Farm to hit 13% sales CAGR in FY11-14. Uncanny ability to outperform Dairy Farm has outperformed the STI in every market cycle during the past decade. It has not shown any earnings decline over the last 10 years. Among others, this resilience has been underpinned by its defensive business model, market leadership and phenomenal ROE track record.