Dairy Farm poised to milk US$501m in net profit this year

It's a measly 2% increase.

According to CIMB, it expects the group to achieve net profit of US$501m in 2013, implying a 2% yoy increase on 2012‟s adjusted earnings. This equates to US$272m core net profit in 2H13, or a 19% hoh increase.

Here's more from CIMB:

We reduce our FY14-15 EPS estimates by 1-3% to incorporate further margin and rupiah weakness.

Since the start of the year, we have cumulatively cut our FY13-15 EPS estimates by 10% due to the same reasons. We believe that Dairy Farm‟s earnings downgrade momentum will taper from now on.

On the back of Dairy Farm‟s initiatives to regain its market positions in Malaysia (price competition and the introduction of the mini mart format) and Singapore (rebranding of Shop N Save as Giant to increase brand equity), we expect 15.3% earnings growth in 2014.

In all, we expect 12.9% earnings CAGR in 2012-15 (which is partly a function of the low base).

Meanwhile, Diary Farm guides for modest improvement in net profit, with 2H13 EBIT margin slightly higher than that of 1H13. We expect a 5.1% EBIT margin in 2H13, which is the same as 1H13‟s.

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