These are Dairy Farm's biggest worries over the next 6-12 months

Sluggish market in Singapore and Malaysia.

According to CIMB, faced with intense competition in Malaysia and crimped by high opex in Singapore, the outlook for Dairy Farm in the next 6-12 months looks choppy. Coupled with pricey valuations, CIMB recommends that investors stay on the sidelines.

Here's more:

We retain our FY13-15 EPS estimates and residual-income-based target price (which implies 30x CY14 P/E). Our Neutral stance is also intact. We
will revisit the stock on easing conditions in Malaysia.

Giant: not standing tall. 1H core earnings dropped 5% yoy due to margin challenges in Malaysia and Singapore. In Malaysia, Giant hypermarkets and supermarkets maintained their sales at a level similar to that of last year, but recorded sharply lower profits due to more aggressive promotional activities and lower supplier income.

Dairy Farm's performance in Singapore was sluggish due to significant increases in operating costs.

More negatives than positives. While growth in Dairy Farm’s main growth market, Indonesia, remains robust, it is not reflected in US$ terms due to a weak rupiah. Coupled with tough operating conditions in Malaysia and Singapore, these three markets offset a stellar performance in Hong Kong.

Stay on the sidelines.
Dairy Farm is richly priced, relative to both its historical trading band and its peers. It is trading 1 s.d. above the 5-year mean of its forward core P/E and at 27x CY14 P/E for a 2-year EPS CAGR of 15% (vs. regional retailers' 18x CY14 P/E for 19% 2-year EPS CAGR).

Additionally, with global equity markets seemingly catching a second wind, we believe that it could be difficult for Dairy Farm to outperform the FSSTI. Over the past 10 years, we note that Dairy Farm’s share price tends to perform in line with the market during a bull run.

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