DFI Retail shares pop on news of sale of Giant and Cold Storage

Surge in stock price helps the benchmark STI hit a record high during the week

- Kang Wan Chern

Shares in DFI Retail Group rose after it announced on March 24 that Giant and Cold Storage in Singapore would be sold to Malaysian retail group Macrovalue.

The $125 million deal, expected to be completed in the second half of the year, will involve all 41 Giant and 48 Cold Storage outlets, including CS Fresh and Jason's Deli, in Singapore.

The sale comes shortly after DFI reported that its Singapore supermarkets business had turned profitable in the 2024 financial year after several years of losses. Despite the turnaround, DFI chief executive Scott Price said during the company's results briefing that the business was highly competitive and was expected to remain stable at best moving forward.

Following the sale, DFI will focus on developing its 7-Eleven convenience store chain and Guardian health and beauty business in Singapore and the region, as it believes the two businesses have more potential for growth and will be able to deliver better margins.

Analysts from CGS International are betting that DFI could potentially issue a special dividend.

"Following its Singapore divestment, we think there is potential for a special dividend of at least four US cents per share, based on a 60 per cent payout of the proceeds," said analysts Meghana Kande and Lim Siew Khee on March 24.

Shares in DFI, which is a component stock on Singapore's Straits Times Index (STI), closed the week at US$2.39, up by more than 6 per cent.

STI SURPASSES 4,000 MARK

DFI's jump helped the benchmark STI hit a record high during the week.

The index hit 4,005.18 points shortly after the market opened on March 28, breaching the 4,000 mark for the first time and surpassing its previous intraday record of 3,991.

The STI closed on March 28 at 3,972.43, up 1.17 per cent for the week. Besides DFI, counters such as ST Engineering, CapitaLand Investment and the three local banks also rose.