MENU

How Does Dairy Farm International Holdings Ltd Make Money?

It is paramount to know what a particular company does and how it makes money before investing in it. Investing in a business without such knowledge is akin to travelling to an unknown territory without a map.

On that note, let’s check out what business Dairy Farm International Holdings Ltd (SGX: D01) is involved in and how it generates its revenue.

Dairy Farm, which has 13 decades of experience, is a pan-Asian retail group with more than 6,500 outlets (including associates and joint ventures) across 12 Asian countries and territories. It operates supermarkets, hypermarkets, convenience stores, health and beauty stores, and home furnishings stores under various popular brands.

Let’s take a look at the table below for the revenue contribution of each business segment for the financial year ended 31 December 2016 (FY2016):

Source: Dairy Farm International Holdings Ltd Annual Report 2016

Revenue from the Food business segment, which made up the bulk of sales in FY2016, was US$8.17 billion. This portion comprises of supermarket, hypermarket and convenience store businesses. Some well-known brands under its stable are Cold Storage, Giant and 7-Eleven.

Next, the Health and Beauty segment, as the name suggests, comprises of health and beauty businesses. Guardian and GNC are under this division.

Moving on, Home Furnishings segment is Dairy Farm’s IKEA businesses. Its interests in IKEA are located in Hong Kong, Indonesia and Taiwan, operating a total of nine stores.

Last but not the least, the Restaurants segment comprises of Maxim’s, a leading Hong Kong restaurant chain. Maxim’s is a 50% associate of Dairy Farm and therefore, its revenue is not reflected in the table above. For FY2016, the associate brought in US$2.02 billion of sales.

The table below shows the distribution of Dairy Farm’s retail outlets in the various parts of Asia:

Source: Dairy Farm International Holdings Ltd Annual Report 2016

Now that we know the basics of Dairy Farm International Holdings Ltd’s revenue streams, we can then delve into other aspects of the firm such as its profitability, strength of its balance sheet, its cash-generating abilities and so on before deciding to invest in it.

For more (free!) stock analyses and investing tips, sign up here for your FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles.

The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Dairy Farm International Holdings Ltd. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.