Dairy Farm

Dairy Farm: OSK-DMG initiates with a contrarian Buy and TP of US$11.20. Dairy Farm is Asia’s bellwether retail stock with a diversified portfolio. Its cash cows in mature markets provide stability against emerging Asian growth markets such as Indonesia and the Philippines. It has leadership positions across most of its businesses. In China, the company announced its biggest merger and acquisition to date, taking a 20% stake in Yonghui Superstores for US$925m. This move may herald further expansion in China, which still remains a relatively fragmented market with growth opportunities. Recent reorganisation in the management team to manage the company by business formats instead of geographies could also boost efficiency. DMG believes Dairy Farm is an excellent play on these themes, given its unrivalled scale .