DFI Retail Group has disposed of 1,913,135,376 shares indirectly held through its subsidiary in Yonghui Superstores to Guangdong Juncai International Trading, a subsidiary of MINISO Group Holding Limited. 

 

The disposal of the shares, which are listed on the Shanghai Stock Exchange, will net the group RMB4.9 billion ($823.3 million), or RMB2.35 per share, upon completion. 

 

The completion of the disposal is subject to clearance from relevant antitrust authorities on the Chinese mainland and the Shanghai Stock Exchange, clearance from the relevant foreign exchange authorities on the Chinese mainland for the group&rsquo s account opening for receipt of transfer price. 

 

Additionally, the disposal requires confirmation from the Hong Kong Stock Exchange on no further comments on MINISO Group&rsquo s circular. 

 

Following the completion of the disposal, DFI Retail will cease to hold any interest in Yonghui directly or indirectly through its subsidiaries.

 

DFI Retail reported earnings of US$76 million ($101.7 million) for 1HFY2024 ended June, up 127% y-o-y. 

The operator of 7-Eleven in Singapore, Hong Kong, Macau and Southern China says growth in the ready-to-eat food arena can make up for fall in cigarette sales

 

WITH its top line stubbed by declining cigarette sales, the group chief executive of DFI Retail Group : D01 +2.3%, Scott Price, is eyeing a growing appetite for ready-to-eat food &ndash which he believes can transform its chain of convenience stores into &ldquo quick-service restaurants&rdquo .

 

DFI Retail Group, which operates the 7-Eleven brand in Singapore, Hong Kong, Macau and Southern China, is moving towards driving traffic to its stores for cooked food &ndash which Price says would put the convenience-store chain among players in the quick-service restaurants market.

 

&ldquo We are seeing, in essence, the opportunity for our 7-Eleven (stores) to become convenient quick-service restaurants,&rdquo he said on Friday (Aug 2), after the group posted robust first-half underlying profit driven by its food and convenience segments.

 

He added that this was a &ldquo different strategy for growth&rdquo that would become attractive.

 

He estimates that the quick-service restaurants segment in Hong Kong, which includes fast-food players such as McDonald&rsquo s and KFC, is valued at around US$4 billion. DFI Retail Group already has a finger in the quick-service restaurants pie, operating food brands in Hong Kong such as Maxim&rsquo s MX and Hong Kong Day.

 

His estimate is in line with data from analytics company GlobalData, which showed that the food service market size for quick-service restaurants and fast food in 2022 stood at US$3.3 billion. The figure is projected to reach US$3.9 billion by 2024, said Anuran Dhar, GlobalData practice head for food service.

 

With around 1,000 7-Eleven stores in Hong Kong, DFI Retail Group has &ldquo an enormous footprint&rdquo to offer &ldquo a pretty exciting, convenient proposition of both cold and hot foods&rdquo , said Price.

 

He noted that 7-Eleven is &ldquo powerfully known&rdquo across Asia, and that consumers in Japan were also likely familiar with it.

 

Japan&rsquo s 7-Eleven stores are considered subject-matter experts in the ready-to-eat arena, he said, adding that DFI&rsquo s collaborations with the chain have even put onigiri, a Japanese rice ball, on the menu.

 

DFI Retail Group&rsquo s pivot to ready-to-eat comes as cigarette sales in the stores have fallen. In the group&rsquo s results, it noted that like-for-like sales performance in Hong Kong was hit by reduced cigarette sale volumes following tax increases kicked in at the end of February.

 

In comparison, 7-Eleven in Singapore and Southern China had robust like-for-like sales growth, driven by increased foot traffic and strong performance in non-cigarette categories &ndash led by ready-to-eat.

 

The trend of the ready-to-eat segment gaining while the cigarettes segment declines may be better in the long term. Price said: &ldquo Ready-to-eat is obviously a huge driver of margin expansion, and significantly better than cigarette margins.&rdquo

 

The growth in its ready-to-eat food portfolio would shore up a decline in cigarette sales, he added.

 

&ldquo As cigarettes play less in our portfolio from a revenue base, we have an enormous opportunity to replace that with ready-to-eat,&rdquo he said.

 

On Thursday, the group reported that its underlying profit more than doubled on-year to US$75.6 million for the first half ended Jun 30, from US$33.3 million in the year-ago period.

 

This is despite its revenue dipping 4 per cent to US$4.4 billion year on year, from US$4.6 billion.

 

In the convenience division, which includes ready-to-eat foods, profit rose 73 per cent in H1 FY2023. Sales for ready-to-eat grew 13 per cent over the period, the group noted.