Dairy Farm

Dairy Farm: CIMB analyze Carrerfour's withdrawal on Dairy Farm. Note that Carrefour’s withdrawal from SG bodes well for Dairy Farm, as not only will Dairy Farm get a chance to extend its local market leadership, but it can also swoop in on Carrefour’s retail staff, a boon in the current tight labour market. Add that Dairy Farm has the potential to step into Carrefour’s shoes and extend its mkt leadership after Carrefour’s departure. Through its Giant banner, it holds more than 50% of the hypermarket market by number of outlets (8), outmuscling its nearest competitor, co-operative NTUC FairPrice (5 hypermarkets in the suburbs). Even before Carrefour’s decision to leave Singapore, Dairy Farm was set on opening a new Giant hypermarket at Suntec (site secured). Now, it will be exploring options to take over Carrefour’s outlet at Plaza Singapura. House estimate Carrefour’s sales at €100m from its 2 outlets, or around 10% of Dairy Farm SG’s revenue. This is the potential wallet share for the remaining incumbents. Further, Carrefour’s withdrawal will allow Dairy Farm to swoop in on its retail staff, a boon in the current tight labour market. CIMB Maintains O/p with TP US$12.00