DFI Retail shares pop on news of Giant, Cold Storage sale; stock helps drive STI to record high

SINGAPORE – 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

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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.

Responding to the new record, the Singapore Exchange (SGX) noted that over the past three years, the STI has delivered total shareholders’ returns of 40 per cent in terms of share price appreciation and dividends, compared with total returns of 31 per cent delivered by the S&P500.

SGX market strategist Geoff Howie said the latest record comes on the back of improving investor sentiment, boosted by strong Singapore gross domestic product growth in 2024 at 4.4 per cent, and “a cautiously optimistic market outlook for 2025”.

Investor interest is also returning after a Monetary Authority of Singapore-led review group on Feb 21 announced measures to support and revive the local stock market.

Those measures include investing an initial $5 billion in local stocks with selected fund managers, as well as extending tax incentives and streamlining regulations to attract new listings.

Almost 30 billion shares were traded in February, a 56 per cent jump from January, while the total market value of all transactions for the month was up 42 per cent to $29.6 billion over the same period, according to SGX.

More investor protection needed

However, market insiders and observers told The Straits Times that the review group’s efforts to enhance investor recourse avenues

should be accelerated to sustain the current momentum in the stock market, and prevent investor trust from eroding.

Suggestions included expanding the legal options for investors burnt in the stock market to recoup their losses, and strengthening minority shareholder protections.

Insiders noted that low trading liquidity and stock valuations of many SGX-listed stocks, particularly non-STI constituents, limit minority investors’ ability to cash out of their positions when needed. This may pressure minority shareholders to accept unfavourable prices in privatisation deals, giving controlling stakeholders excessive power.

Sinarmas Land, the latest company to receive a privatisation offer, is one example.

On March 27, Sinarmas Land announced that it had received a voluntary unconditional cash offer from Lyon Investments to acquire all the shares it does not already own for a total of $1.32 billion.

Lyon Investments is controlled by Indonesia’s billionaire Widjaja family. It currently holds about 70.3 per cent of the total number of issued shares in Sinarmas Land.

While the offer price of 31 cents per share represents a 12.7 per cent premium over Sinarmas Land’s last traded price of 27.5 cents on March 24, it is nevertheless a 73.9 per cent discount to Sinarmas Land’s net asset value of $1.19 per share as at June 30, 2024.

The offer for Sinarmas Land also takes the number of firms that could potentially delist from SGX to seven so far in 2025.

Stocks on the move

Shares in heavily traded Yangzijiang Financial continued to break their previous highs through the week. They closed at a new record of 80 cents on March 28.

On March 30, Yangzijiang Financial announced that it will sell its entire treasury shareholding of more than 193 million shares to two separate entities for 72 cents per share, enabling it to raise $139.3 million in gross proceeds.

The treasury shares were originally repurchased under a $200 million share buyback programme at an average cost of 34 cents per share.

The net proceeds from the sale will be directed to Yangzijiang Financial’s core maritime investments in areas such as decarbonisation, the company said.

The two entities involved in the placement of shares will each comprise one investor and three senior executives of the company. This demonstrates “a strong vote of confidence in our long-term vision and growth potential”, Yangzijiang Financial’s chairman, Mr Ren Yuanlin, said in a statement.

“Once completed, the move will strengthen our capital base and enable us to double down on investments in the promising maritime industry.” 

Singapore Post (SingPost) shares jumped by almost 9 per cent last week, closing at 62 cents on March 28.

SingPost on March 27 announced that it had completed the sale of its Australian logistics business, Freight Management Holdings (FMH), to Australian private equity investment firm Pacific Equity Partners for A$1 billion (S$844 million).

The divestment generated gross proceeds of about A$781.5 million – higher than the previously expected A$775.9 million – and an estimated gain of $289.5 million.

Sale proceeds will be used to reduce debt, including the repayment of a A$362.1 million debt taken to finance FMH’s acquisition. The board will also announce details of a special dividend at a later date.

What to look out for this week

Global markets could be volatile as a slew of US economic data releases is scheduled through the week.

They include data on the US manufacturing sector on April 1, private sector employment on April 2, and the number of new jobs created in the US in March on April 4.

Bad news could further rattle US consumer and investor sentiments, which are already down following the announcement of new car tariffs by President Donald Trump last week.

The benchmark S&P500 index was down 1.5 per cent through the week, while the tech-heavy Nasdaq was down 2.6 per cent.