Brokers' take

Dairy Farm | Neutral Target price: US$6.63 Sept 23 close: US$6.81 RHB Research Institute, Sept 23

WHILE contribution from the health & beauty business should still be Dairy Farm's main driver for FY2019-2020F earnings, we remain cautious on the outlook amid ongoing protests in Hong Kong.

Based on data provided by the Census and Statistic Department of Hong Kong, retail sales in June and July fell 7 per cent and 11 per cent. We estimate that about 70 per cent of Dairy Farm's FY2018 operating profit was derived from Hong Kong, therefore, ongoing protests there are likely to impact retailers, especially those located in Causeway Bay near the rallying point for protests.