DFI Retail Group Holdings Limited's (SGX:D01) Has Been On A Rise But Financial Prospects Look Weak: Is The Stock Overpriced?

Simply Wall St.04-02

DFI Retail Group Holdings (SGX:D01) has had a great run on the share market with its stock up by a significant 6.3% over the last month. We, however wanted to have a closer look at its key financial...

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We, however wanted to have a closer look at its key financial...</p>\n\n<a href=\"https://simplywall.st/stocks/sg/consumer-retailing/sgx-d01/dfi-retail-group-holdings-shares/news/dfi-retail-group-holdings-limiteds-sgxd01-has-been-on-a-rise\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>DFI Retail Group Holdings Limited's (SGX:D01) Has Been On A Rise But Financial Prospects Look Weak: Is The Stock Overpriced?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDFI Retail Group Holdings Limited's (SGX:D01) Has Been On A Rise But Financial Prospects Look Weak: Is The Stock Overpriced?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-02 06:07 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/sg/consumer-retailing/sgx-d01/dfi-retail-group-holdings-shares/news/dfi-retail-group-holdings-limiteds-sgxd01-has-been-on-a-rise><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>DFI Retail Group Holdings (SGX:D01) has had a great run on the share market with its stock up by a significant 6.3% over the last month.   We, however wanted to have a closer look at its key financial...</p>\n\n<a href=\"https://simplywall.st/stocks/sg/consumer-retailing/sgx-d01/dfi-retail-group-holdings-shares/news/dfi-retail-group-holdings-limiteds-sgxd01-has-been-on-a-rise\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK6034","symbol_name":"食品零售","start_time":0,"source_url":"https://simplywall.st/stocks/sg/consumer-retailing/sgx-d01/dfi-retail-group-holdings-shares/news/dfi-retail-group-holdings-limiteds-sgxd01-has-been-on-a-rise","article_id":"2424681085","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/5023000-choice1-main-header/1585186815097"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2424681085","pubTimestamp":1712009220,"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"DFI Retail Group Holdings (SGX:D01) has had a great run on the share market with its stock up by a significant 6.3...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK6034":"食品零售","D01.SI":"牛奶国际控股有限公司","BK6518":"食品和药品零售股"},"translate_title":"DFI零售集团控股有限公司（SGX：D01）一直在上涨，但财务前景看起来很疲软：股票定价过高吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"D01.SI":1},"content_text":"DFI Retail Group Holdings (SGX:D01) has had a great run on the share market with its stock up by a significant 6.3% over the last month.   We, however wanted to have a closer look at its key financial indicators as the markets usually pay for long-term fundamentals, and in this case, they don't look very promising.      Particularly, we will be paying attention to DFI Retail Group Holdings'  ROE today.    Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money.  Put another way, it reveals the company's success at turning shareholder investments into profits.  Check out our latest analysis for DFI Retail Group Holdings  How To Calculate Return On Equity?  The formula for return on equity is:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for DFI Retail Group Holdings is:3.1% = US$30m ÷ US$988m (Based on the trailing twelve months to December 2023). The 'return' is the profit over the last twelve months.  One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.03 in profit.   What Has ROE Got To Do With Earnings Growth?  So far, we've learned that ROE is a measure of a company's profitability.  Based on how much of its profits the company chooses to reinvest or \"retain\", we are then able to evaluate a company's future ability to generate profits.  Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes.  DFI Retail Group Holdings' Earnings Growth And 3.1% ROE  As you can see, DFI Retail Group Holdings' ROE looks pretty weak.   Not just that, even compared to the industry average of 9.1%, the company's ROE is entirely unremarkable.   For this reason, DFI Retail Group Holdings' five year net income decline of 40% is not surprising given its lower ROE.  We reckon that there could also be other factors at play here.  Such as - low earnings retention or poor allocation of capital.     However, when we compared DFI Retail Group Holdings' growth with the industry we found that while the company's earnings have been shrinking, the industry has seen an earnings growth of 12% in the same period. This is quite worrisome.   SGX:D01 Past Earnings Growth April 1st 2024 Earnings growth is an important metric to consider when valuing a stock.   It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline).   This then helps them determine if the stock is placed for a bright or bleak future.    One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if DFI Retail Group Holdings is trading on a high P/E or a low P/E, relative to its industry.    Is DFI Retail Group Holdings Efficiently Re-investing Its Profits?   With a high three-year median payout ratio of 95% (implying that 5.4% of the profits are retained), most of DFI Retail Group Holdings' profits are being paid to shareholders, which explains the company's shrinking earnings.    The business is only left with a small pool of capital to reinvest - A vicious cycle that doesn't benefit the company in the long-run.       Our risks dashboard should have the 3 risks we have identified for DFI Retail Group Holdings.       Moreover, DFI Retail Group Holdings has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth.      Upon studying the latest analysts' consensus data, we found that the company's future payout ratio is expected to drop to 65% over the next three years.   The fact that the company's ROE is expected to rise to 26% over the same period is explained by the drop in the payout ratio.      Summary    In total, we would have a hard think before deciding on any investment action concerning DFI Retail Group Holdings.      Particularly, its ROE is a huge disappointment, not to mention its lack of proper reinvestment into the business. As a result its earnings growth has also been quite disappointing.       Having said that, looking at current analyst estimates, we found that the company's earnings growth rate is expected to see a huge improvement.     Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. Valuation is complex, but we're helping make it simple.Find out whether DFI Retail Group Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.View the Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. 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