The closing of France’s Carrefour supermarkets in Singapore will benefit Dairy Farm International Holdings Ltd , as it gets a chance to extend its market share in the city state, CIMB Research said.
World No. 2 retailer Carrefour said it will shut its two stores in Singapore by the end of this year, as it pulls out of more non-strategic countries to free up cash to cut debt and fund the revival of its struggling European hypermarkets.
“Carrefour’s withdrawal will allow Dairy Farm to swoop in on its retail staff, a boon in the current tight labour market,” CIMB said in a note.
Dairy Farm, through its ‘Giant’ supermarket chain, controls more than 50 percent of the hypermarket sector, CIMB said, adding that the company will be exploring options to take over Carrefour’s outlet at shopping mall Plaza Singapura.
It has an ‘outperform’ rating on Dairy Farm and a target price of $12. Shares of Dairy Farm were up 0.1 percent at $10.90, and have gained 16.8 percent so far this year.
The brokerage estimates that Carrefour’s sales in Singapore was about 100 million euros, making up about 10 percent of Dairy Farm’s revenue in the country.
Reporting by Charmian Kok in Singapore; firstname.lastname@example.org