Being a customer may sometimes give you great ideas for companies that you can invest in.
Just by walking along any street or shopping mall, you may come across numerous investment opportunities.
With the recent Goods and Services Tax (GST) payout in August 2024 and the upcoming one-off special payment of between S$200 to S$400 in September, people may find great reasons to shop.
Capitalising on this opportunity, here are some retail brands you can consider for your investment portfolio.
DFI Retail Group (SGX: D01)
DFI Retail Group (DFI) is one of Asia’s largest retailers and a member of the multinational conglomerate, Jardine Matheson (SGX: J36).
In Singapore, DFI owns popular retail brands including the grocery chains Giant and Cold Storage, the ever-convenient 7-Eleven, and Guardian, the health and beauty retailer.
Recently, DFI has ventured into the digital space with the launch of yuu rewards, an application designed to offer Singaporeans savings and rewards while shopping.
On 1 August 2024, DFI announced its half-year results.
Revenue experienced a slight decline of 3.7% year on year, driven by slowing business in the food and home furnishing divisions.
While the company reported considerable growth in its health and beauty segment in the first quarter of 2024 (1Q 2024), momentum slowed down, with the division staying reporting flat revenue for 1H 2024.
Revenue from DFI’s furnishing business declined due to macroeconomic challenges in Hong Kong and Indonesia.
Despite a slight revenue slowdown, DFI Retail Group announced that underlying profit for 1H 2024 surged by nearly 130% year on year.
This is a result of ongoing disciplined cost control and improvement in sales for high-margin goods across various segments.
Looking ahead, DFI provided an optimistic financial outlook, reaffirming its full-year underlying profit outlook for 2024 to be in the range of US$180 million to US$220 million.
This marks an improvement from the previous year’s underlying profit of US$155 million.
Metro Holdings (SGX: M01)
Metro Holdings, a property investment and development group in Singapore, is perhaps better known for its flagship retail operations, Metro Store, found in Orchard and Woodlands.
The company’s property arm holds assets in several countries, including Singapore and China, among others.
Its retail arm, Metro Store, is a department store offering a wide range of products that cater to our daily needs, ranging from household appliances to fashion and toys.
In addition to physical stores, Metro Holdings has expanded into e-commerce, operating on platforms in Lazada and Shopee, as well as Metro Store’s online store.
For fiscal year 2024 (FY2024) ending on 31 March 2024, Metro Holdings reported a modest set of earnings.
Net revenue came in at S$115.9 million, a slight decrease of 1.1% year on year.
This occurred despite an improvement in retail sales, which grew by 1.4% year on year to S$105.4 million.
The reduction in revenue is due to a weaker performance in the group’s property business in Indonesia.
Net profit fared even worse, plunging by 42.1% year on year to S$14.6 million.
Metro Holdings cited several reasons for lower profits in FY2024, including tightening margins from a competitive retail environment and ongoing property woes in China.
Despite these challenges, the group managed to generate a small positive free cash flow of S$1.4 million for FY2024.
For FY2024, Metro Holdings declared a dividend of S$0.02 a share, payable on 18 August 2024.
Apart from our local retailers, Singapore is known for welcoming international brands with open arms.
Here are two other companies for you to consider.
Bath & Body Works Inc (NYSE: BBWI)
With nine outlets across the island, Bath & Body Works (BBW) is a shop that many may have come across.
The retailer sells a variety of body products, such as soaps and shampoos, as well as fragrances.
Founded in the US 34 years ago, BBW has grown into an international business, with more than 2,300 stores worldwide.
This extensive global presence has earned BBW a spot on the Fortune 500 list.
For the first quarter of FY2024 (1Q FY2024), which ended on 4 May 2024, the company delivered solid earnings.
While net revenue trickled down slightly by 0.9% year on year to US$1.4 billion, net income jumped by 7.4% year on year to US$87 million.
This increase was largely due to successful cost optimisation efforts, which improved operating margin by 0.5 percentage points to 13.5%.
Additionally, the company generated a positive free cash flow of US$30 million.
Following a satisfying quarter, BBW has adjusted its outlook for the remaining fiscal year.
The retailer raised its sales guidance, from a decline of 3% to flat to a decline of 2.5% to flat.
Lastly, BBW also announced a dividend of US$0.20 per share for the second quarter of FY2024.
Pan Pacific Holdings International Holdings (TYO: 7532)
Pan Pacific Holdings International Holdings (PPH) is a Japanese retail giant, with operations in discount retailing, supermarkets, and department stores.
The company is best known for Don Quijote in Japan, or Don Don Donki as it is known locally in Singapore.
After debuting in 2017 in Orchard Road, Don Don Donki has expanded rapidly over the past seven years.
As of last December, Don Don Donki has expanded to 16 stores across Singapore, with the latest addition in Tiong Bahru Plaza.
For the third quarter of FY2024 (3Q FY2024) ending 31 March 2024, PPH released impressive financial results.
The company experienced record sales and growth this quarter, continuing its hot performance streak from the previous two quarters of FY2024.
Overall, net revenue reached ¥519.8 billion, an 8.6% year on year increase.
Net profit saw an even more remarkable rise, soaring 62.2% year on year to ¥23.9 billion.
Following this record-breaking quarter, PPH issued a more optimistic outlook for the full fiscal year.
The company raised its net sales and net income projections by 0.8 and 4.6 percentage points, respectively.
Free cash flow for Q3 FY2024 stood at ¥53.7 billion.
The company also lifted its annual dividend for FY2024 to ¥21 per share, up from the previous year’s ¥20 per share.
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Disclosure: Aw Kai Rui does not own any of the stocks mentioned in this article.
