DFI Retail Group Holdings Limited (D01) Earnings Call Transcript & Summary

Good morning, everyone and thank you for attending the DFI Retail Group 2026 Half Year Results Presentation. I'm Karen Chan, Strategy and Investor Relations Director. Joining us today is Mr. Scott Price, Group Chief Executive Officer; and Mr. Tom Van der Lee, Group Chief Financial Officer, who will be providing prepared remarks on our half year results, followed by a Q&A session. Today's presentation is being webcast in its entirety. In addition, the full text of results and presentation slides are already uploaded on to the IR website. Before we start, I would like to remind you of the following forward-looking statements. The information about to be presented is for information purposes only and is not intended to be investment advice for any person. There's no intention to invite for any dealings in any securities. There may be forward-looking statements mentioned in the presentation materials, which include statements regarding our intent, belief or current expectations with respect to the company's business operations and market conditions. You are expressly advised not to rely on these forward-looking statements as they are subjective views, which are subject to risks and uncertainties. And with that, I'll now pass the mic over to Scott. Scott, please.

Thank you, Karen and good morning, everyone. Welcome to the DFI first half results. Let me first take you through some key highlights. Overall, solid performance on revenue, a consistent improvement in our like-for-like and that includes a 3% with the impact of cigarettes as well included and quite pleased with that performance. Overall, margins improved across for the most part in the business. We're comfortable where we sit and on our way towards the midpoint guidance that we gave in December of last year in our Investor Day. So seeing margin expansion as an opportunity continuing moving forward. Health & Beauty deepened its penetration of wellness products. And for those of you who have attended previous events, or have been to one of the -- one of our stores with the derma, we see great margin opportunity coming out of the Health & Beauty. Convenience and home furnishing, through 18 to 24 months of effort behind not only assortment but also investment in pricing. Both of those formats returned to growth. And our Hong Kong Food business, where 18 months ago, we sat at roughly a 15% premium to a basket in Greater Bay Area, Shenzhen 4 formats. We sit at about a 3% discount. So we've removed the value of anyone going across the border. During the first half, we gained volume share, meaning absolute volume. We're going to look now, through our efforts of that, increased traffic to gain value share moving forward. Access to customers, continue to open stores and focus on CapEx light in South China and Indonesia. The digital ecosystem, I'll talk about that in a few more minutes in more detail, though, that I think has done very well and we'll talk a bit about not only the retail media but the overall digital ecosystem P&L. Lean and agile, we continue to drive everyday low cost. It is an important part of our business model that allows us to not only take those savings to invest back into pricing for customers but to also invest and increase margin for shareholders. And finally, we end the first half with a very strong balance sheet and allowing us, therefore, flexibility as we see inorganic opportunities moving forward. A bit more highlights in terms of the key financials before I turn it over to Tom. So overall, underlying profit increased 44%. Subsidiary revenue grew 4.3% or 2.8% on a like-for-like. Very strong Health & Beauty performance in terms of market share gains across all of our key markets. Convenience store like-for-like at a plus 2%, driven by the higher-margin ready-to-eat and exclusive collectibles versus the replacement of much lower margin tobacco sales. We did, as I mentioned, invest in pricing and achieved a -- like in Hong Kong, a 0.5% like-for-like growth in the second quarter, even though overall for the first half, it was flat. Very strong performance in IKEA. We put quite a bit of work in that, will talk about that in a couple of more minutes but a 4% growth like-for-like in a category that is generally seen as challenged. I think we have the right formula there. E-commerce, DFIQ Media, 35% of our revenue growth. And now that ecosystem is margin accretive to stores, meaning that the margin out of that digital ecosystem is higher than our store margins. 6.9% penetration of e-commerce and we have a 300% increase in our DFIQ Media. Excluding the impact from cost reallocation, we declined 15% our SG&A. So again, as I said, a consistent and constant focus upon everyday low price, everyday low cost. And then finally, declaring an increase to our interim dividend of 77% to $0.062 and reaffirm our guidance on a 70% dividend policy. And with that, I'm going to hand it over to Tom.

Thank you, Scott. Let me take you through the key financials. Starting with the income statement, a very strong first half of 2026 and it shows that we are delivering a strategy which we set out at the Investor Day. And this puts us firmly on track to deliver the top end of our 2028 guidance we've given last year in December. To ensure an apple-to-apple comparison, we provided a restated 2025 base that excludes the divestment of Singapore Food, the closure of Mannings, China and the disposal of Robinsons Retail. We starting with revenue from subsidiaries, $4.1 billion, up 4% year-on-year. The same for Maxim's, $1.4 billion, also here, up 4% year-on-year. So both Maxim's and subsidiaries, strong growth on top line. On the underlying [indiscernible] profit from subsidiaries, $101 million, up 49%. That's on the back of a strong earnings recovery of IKEA, Food and lower SG&A and financing costs. Maxim's is up 15% to $16 million and it gives a total underlying profit of $117 million, up 44%. As you can see the bottom, the interim ordinary dividend per share is $0.062. That's up 77% and it reflects a more even distribution between the interim dividend and the full year dividend. We still reconfirm our guidance of 70% full year payout on dividend. And we can pay more in interim because the momentum is very strong. Cash generation is very strong and we are able to pay out this in October. Going into a bit more detail on the sales slide. So you can see here, we continue to deliver a strong growth in margins and returns, all of which are key building blocks for driving our TSR. Subsidiary like-for-like sales showed the consistent improvement to 3% growth in the first half of 2026. Strong momentum in Health & Beauty, return to growth in Convenience and home furnishing as well as continued improvement in Food. Some comments on the key formats. Health & Beauty, 8% growth or 6% like-for-like. We continue to share -- to gain share in wellness, strong tourist and airport sales store growth, e-commerce growth in Southeast Asia. On a constant currency basis, it's at 7%. Then on Convenience, 4% up like-for-like or 2% on a like-for-like -- sorry, 4% in total, 2% like-for-like. And here, the focus is on higher-margin non-cig categories with RTE being the focus. Cigarettes, though, have stabilized. So cigarette sales stabilized year-on-year. Food, broadly stable if we exclude the divested businesses. We see continued improvement in the second quarter of this year on the back of our EDLP pricing in Hong Kong and that supported a 1.2% volume growth in the first half despite ongoing pivot to value for our consumers. Home furnishing, a very sharp turnaround, initiatives and price investments, expanding our food range and online presence resulted in a 4% like-for-like sales compared to a 6% decline in the first half of last year and a 3% decline in the second half last year. So a turnaround for IKEA. And Maxim's up 4% on the back of strong sales in Southeast Asia and a return to growth in China Mainland. Hong Kong, though was quite soft for Maxim's. Operating profit, operating profit by format. Now as part of our overhead optimization exercise, our cost reduction exercise, certain resources have been reallocated from the group to format level and that drives greater agility and more accountability. As a result of that, we have restated also prior year figures to make the year-on-year comparisons easier and understandable. Starting with Health & Beauty. Operating profit of $109 million, up 2% like-for-like -- sorry, year-on-year. The margin, though declined slightly with 40 basis points, mainly because of intensified competition in Malaysia and the growth of online from third-party marketplaces like TikTok and Shopee. However, we are remaining -- confirming that we -- the guidance we've given for '28, 9% to 11%, we are on track to deliver that. And you will see the second half is going to be better than the first half for Health & Beauty. Convenience, up 2% to $37 million with margins broadly stable. Food, here operating margin reached $17 million or 27% up year-on-year and the operating margin improved 30 basis points year-on-year to 1.5%. In Hong Kong, margins are stable as we invested in price and the price investments were paid for -- offset by a lower cost price. So we do more direct sourcing, we can lower cost prices and help us to pay for the margin investment in price. Also very strong cost discipline in the format to keep operating costs low for the first half. Cambodia, it doubled the operating profit on the back of double-digit growth of sales and strong improvement in margin rate. Then IKEA, the strongest improvement, 85% up year-on-year to $15 million for the first half. Top line growth strong and cost optimization, both on rental and overhead across the business drove the underlying performance for IKEA. The operating margin rose 200 basis points to 4.3%, a strong performance for the first half for IKEA. We then move on to the profit and underlying profit. The underlying profit for subsidiaries is $101 million, up 49% at a 2.4% margin, up 70 basis points against the same period last year. Key drivers: one, earnings recovery in IKEA and in Food, as I highlighted before, the SG&A savings, improving economics for digital, including retail media and our reduced financing costs. The total underlying profit, including Maxim's went up 44% to $117 million for the first half this year. And SG&A costs declined on a like-for-like basis, 15% year-on-year. And we expect more reduction to come in the second half and the next years. Cash flow. Operating cash flow up 16% for the first half of the year. Free cash flow is slightly down to $85 million. That's because we have stepped up our CapEx in line with our full year forecast and I'll share a bit later on where we've invested the CapEx in. As we said in the Investor Day last year, our capital allocation principles are firm and we follow those. So those principles are, we first invest in our core, so making sure we continue to renovate our stores, continue to grow our stores. We invest in the future. We're investing in AI and digital to make sure the future profits are secured. We are growing our dividends in line with our policy and our top line and bottom line growth and we pursue only TSR accretive M&A. And if we can't find those, we will return the money back to the shareholders. Then capital expenditure. I've now share a bit more breakdown of where we spend the CapEx on. So the CapEx up to $93 million, in line with our full year guidance of $200 million to $220 million. So we are on track to deliver that commitment. We invest in a few key areas. So if you look at omnichannel and technology, the first dark blue building block, we added 1,200 screens in our stores in the first half for retail media. We have now 11,500 screens in all our stores across all our markets, on track to have 18,000 screens by the end of 2028. We invested in AI-enabled replenishment technology in all our markets and we're rolling out electronic shelf labeling or ESL in Hong Kong in our Wellcome that helps us to reduce our store labor and improve productivity. On store refurbishments, we renovated 157 H&B stores to drive wellness. For Food, we are remodeling our largest stores in Hong Kong, driving top line growth. And for Convenience, we have larger refurbs in Hong Kong and we added 128 new food bars in China. And last, for new stores, we opened 119 new stores in the first half of this year, up (sic) [ down ] from 154 in the first half from last year. We also closed some stores but the CapEx represents the gross investment in new stores. Then on shareholders. So as announced earlier, our interim dividend will be $0.062. Again, our full year guidance will remain 70% but that's a better balance between the interim and the full year dividend. And the return on capital, 11.7% in the first half, up from 9.4% end of last year and we are on track to deliver 15% by 2028 as we shared and committed in our Investor Day last year. And with that, I'll turn it on to -- over to Scott for the strategy and updates.

Thanks, Tom. I just want to spend a few minutes on the operating segments in a little bit more detail. So I'll start with Health & Beauty. So 8% growth in sales. Obviously, we've opened some new stores. So the like-for-like store sales is plus 6%, representing market share gains across all of our key markets. Interestingly, Hong Kong, Macau growth at plus 5%. One is the wellness leadership but also now we're seeing higher-value tourists come back to Hong Kong. Our tourist stores had revenue growth of roughly 10%. And I think that this is a bit of a trend that we're seeing, which is, people are still traveling but they're traveling closer to home. Southeast Asia business, very pleased with the growth that we're seeing there, plus 9%. And you'll see in Indonesia and Vietnam, we had close to a 20% like-for-like growth. We're seeing a pretty significant positive reaction to the health proposition that we're bringing forward, wellness. Gen Z, which a few of you probably in this room are Gen Z, maybe at the outer edge of it, far more attuned to wellness than necessarily previous generations. Exclusive distribution now announced with Holland & Barrett, which is a great brand. We're very pleased with that and believe that, that will be a great part of our assortment as we expand that across several of our markets. In-store coverage now has expanded across our skin and scalp assessment tool. So that is an AI-driven tool that we developed in conjunction with Samsung. And as I mentioned previously, a significantly higher basket value than a customer who does not participate. We've done about 20,000 of those. Over a 20% improvement. Our own brand offers value in key commodities. So although we are expanding into wellness, we are keeping in mind the value-based customer. So our own brand plays that position in the assortment and a great improvement in productivity, importantly, though, in margin as well. Opened 41 stores in the first half. We'll continue on that path, including 2 new franchise stores in Indonesia. We're working very hard to ensure that the Indonesian market will have a profitable franchise model so that as we expand that out across second-tier cities, we have confidence that franchisees will become long-term businesses as opposed to in and in and out. Again, margin doesn't concern me at all. We strategically invested in the Malaysia business. We have a competitor who likes being #1. I'm competitive. I'd like to be #1. So we're strategically investing where it's necessary. We have the margin flexibility to be able to do that in Malaysia. So again, it was a thoughtful investment and I think the right investment. Moving on to the Convenience format. So again, as I mentioned, great performance as we return to growth, 4% year-on-year, 2% like-for-like as we increase our ready-to-eat sales penetration, which is now 24%, or if you exclude the cigarettes from our revenue base, a 34% penetration. It was very small years -- a couple of years ago. We've done a great job of bringing in -- a bit of a Japan-themed. It seems like every second person in Asia -- every other person in Hong Kong has been to Japan 3 times this year. So clearly, there is an affinity and we believe that, that is having a very positive impact. Overall, Hong Kong like-for-like, great final impact in terms of putting behind us 10 consecutive quarters of decline. The team there did an outstanding job pivoting away from -- not too many years ago, guys, we were 50% of our revenue in convenience stores with cigarettes. Very low margin but that is a revenue driver. We've now balanced out that assortment with not only a high level of ready-to-eat penetration but collectibles. I am not the customer. I still don't get Labubu. But K-Pop, these sorts of collectibles, it's bringing new traffic, new customers and I think a new energy to our Hong Kong stores and it's going very, very well. Overall, Singapore, again, a great performance, 8% with same collectible strategy and as well some great promotions. We increased our store base by 112 in South China to nearly 2,000 and see a pathway to continuing to invest. We really, in Guangdong province, have just the 3 main cities covered. We see lots of opportunity now to expand out and broaden the portfolio. Overall, the food bars are going well in Southern China. We are giving QSRs a run for their money. In terms of value meal, we have the convenience of the click-and-collect as well set up. We have tens of thousands of orders a day. I think that's right. So 110,000 orders a day across our stores of click-and-collect each day of a convenience meal and you pick up a breakfast and a coffee or a breakfast and a beverage, pop in, grab it, as you're on your way into the office. Good growth of online sales. Generally, this has been dilutive. I'll talk about that in a couple of minutes when we get to the omni but we're very pleased with the performance here. You have to meet the customer where the customer wants to be met. These offline stores that refuse to engage with platforms and digital are not, I think, playing the right strategic game. And then overall, higher-margin categories in franchise stores means that we continue to see opportunity to increase our margin as we think about the next couple of years to the guidance that we gave in December of last year. If I move on to Food, Food has probably been the most challenging format over the last couple of years as we have dealt with not only a divestment but also just the fact that you see now, in particular, in our market of Hong Kong and Macau, you have Shenzhen and Zhuhai right across the border and a relatively convenient way to go and shop. There was a lot of noise, say, 18 months ago about that traffic happening. Overall, we've done well. I'm really pleased with where we have landed. We were not in a good competitive position 24 months ago, 18 months ago. I think we're in a incredibly good competitive position. So if you were to look at overall, continuing a 1% growth, like-for-like plus 0.5% in the second quarter. So we are accelerating the improvement. Volume share first, then value share second. Big price investments as a result of resetting our structure of our supply chain and where we source our goods. Hong Kong has been controlled by lots of trade and middlemen and various and sundry exclusive partnerships. We have worked our way around those, gone direct, meaning that we are able to get much lower costs that we can pass on to our customers. So that margin has now been protected through that direct sourcing. And from 18 months ago, when we were about a 15% premium to Shenzhen, so if you pick, say, 250, 200 items, the biggest selling items in Hong Kong and you went across the border to Shenzhen and pick 4 retailers and you shop there, it was 15% cheaper to go across the border. Hong Kong is now 3% cheaper. Now one would say, how does that happen? It's because those retailers have to use the higher-margin Tier 1 city to pay for some of their lower-margin loss-making Tier 2 cities. We don't have that problem. We're only in Hong Kong. We've got the ability to deliver not only to our customers but also to our shareholders. So see margin expansion as a great opportunity as well for the food business. Accelerating our omnichannel with a 35% increase in online orders. Quick commerce, which are smaller baskets but we're able to charge a premium, is a good part of that growth. And then finally, our Cambodia business is just growing by an extraordinarily level -- high level. So we're very pleased with that business. We are the only real modern food retailer in Cambodia and we're seeing great financial performance. And then finally, on to IKEA. Last but not least, it has been over the last few years, a bit of a problem child. The reason being that we didn't necessarily have the right assortment at the right pricing with the right proposition. We didn't necessarily have the strength in the categories that we needed to have in. So great credit to the team that has been running this IKEA business. So a strong turnaround, like-for-like sales growing at 4%. That was negative 6%, a year ago. Hong Kong, positive growth of 3%, a big pivot upon value, local relevance, food. Hong Kong years ago launched the Durian ice cream, another thing I will never get. But in any event, we have taken that concept of how do you take the intersection of Scandinavian life and local taste and create some interesting food opportunities, which we're driving, including Swedish-themed breakfasts in our stores. We're now seeing the traffic and we're now seeing the progress from that. Taiwan did -- again, continues to be a stronghold for us, a great growth and we see store expansion. We do not have yet the penetration that we could in terms of number of stores. So we're back into investing in store growth in Taiwan. See, again, omnichannel, where we went on to Shopee, first ever franchisee where we went out and put our proposition. We have stores in Jakarta. We have stores in the major city. It's a huge country, 250 million-plus people. We can't possibly get into all of the islands. Shopee is profitably allowing us to expand. Good food innovation, as I mentioned and that Nordic theme, Scandinavian theme is drawing some great traffic into our stores. Overall, I think that we have got through some of the efforts that we've made of divesting or eliminating assortment that was not relevant to our Asian markets, investing in items that in collaboration with the franchise or, I think, have had powerful impact. And then people still want little treats, right? Still, again, the #1 selling IKEA item across our Asian markets, again, I don't understand, lamps. Why lamps? Don't know. But if it makes you feel good, we'll sell it to you, right? And so again, that allows us to have deep insight as to how the average consumer is really starting to understand where can they afford to give them some treats. Apparently, I was on CNBC a little bit earlier and I didn't know this. But apparently, that's the first thing decorators start with, their lamps. So there you go. That explains it and we have got lots of great lamps at IKEA. And then again, we are focused on the portfolio and closing stores that we do not think are profitable. Finally, just wanted to talk a little bit about our digital ecosystem. We talked about quite a bit. So our digital ecosystem is made up of our -- all of our e-commerce transaction generally dilutive. For 50 years, the customer did the fulfillment and last mile delivery for free. Now you got to pay somebody to do it. So you take those transactions. We have worked very hard at investing in technology that helps us make that very efficient. That business is relatively breakeven. And for the first time after 5 years, we have now pushed that into breakeven. But the ecosystem is then made up of the yuu profitability, our retail media profitability and the ability to -- with 20 million transactions a week, we've got the ability to know more about our customers and we're able to sell that data. That ecosystem was 35% of our revenue growth and is a higher margin than selling product in store. To me, this is what represents what a true omnichannel player does. Now, what right do we have to play in media? It's a bit challenging in Asia, very fragmented market. The media buying agencies generally pan-Asia. So that led us to the decision to buy Cody. Cody is the advertising agency that controls contractually all of the media that you see on the buses, the KMB buses and the subways here in Hong Kong. And it was a little bit hard to break in. Now what happens with the close of this business, we see an opportunity to be able to bundle deals. So new product launches, promotions, whatever it is, they come in, they want access there. We then add it with the thousands of screens that we have in store across our formats here, giving us, I think, quite a competitive advantage to be able to really move quickly in Hong Kong in terms of retail media. It's a minor investment. I don't know that we've announced the investment amount. So I'm not going to say it, so I don't get into trouble later with Tom and Karen. But look, it is mildly dilutive in the year 1. And I think within 12 to 18 months, it will be profitable. But if you add it up into the overall retail media P&L, it's a great accretive part of that business and we'll continue to look for those inorganic opportunities that, to me, represent a very strategic chance to continue to build not only our proposition for customers but also for shareholders. And with that, I'll turn it back over to Tom.

Thank you, Scott. Let me take you through the outlook for '26. So based on a very strong first half, we are revising upwards our guidance for sales and for profit. So sales -- the previous guidance was 2% to 3% organic growth. We updated to 3% to 4% for the full year. The same for the underlying profit between $270 million to $300 million, the previous guidance. The current guidance will be $285 million to $305 million. Now we are confident that we're going to make sure we're going to deliver those numbers. CapEx, dividend and ROCE, those all remain unchanged. And with that, I think we are ready for the Q&A. Karen?

Thank you, Scott and Tom. And with that, we'll open up the floor for Q&A. [Operator Instructions] First question?

This is Brian from Citi. I have 2 questions. First question is about the margin profile. If I use your numbers in the presentation, we can see that Health & Beauty margin is pressured by the Malaysia price promotion, right? And the convenience stores dropped a little bit. I don't know if that's a rounding issue or not and food improve on direct sourcing. I mean, could you share more color on the margin profile progress we had in the first half and in the second half, what should we be looking at? And is there any -- I mean, we shared a lot about the margin initiatives that we are doing but is there any other factors that we're missing that might harm our operating margin for that? That's the first question on margin. My second question is about the management change. We have some -- quite a big change in the management and I wanted to know the rationale behind it. I quote from the filing, it says, for the next phase of growth. So I just wanted to know what that is because Andrew is from Health & Beauty, right? And it was a high-growing business and he's switching to IKEA. So -- and we have any other changes? So I just want to know if for Health & Beauty, are we -- I mean, are we having -- are we not accelerating? Or I mean, I just want to know the rationale behind all these management changes. That's 2.

Great. Well, I'll answer the second question first and then turn the margin over to Tom. So the first, retail is fast moving. And my job is to develop our leadership team and develop the skill set of our leadership team in conjunction with our Board. Each one of our formats compared to 2 years ago, I call it, we went from DFI 1.0 to DFI 2.0. AI, technology, competition, customers means that we have to focus on this next phase of competitiveness and I call it DFI 3.0. Each one of our businesses have great skills and new leaders bring in a different perspective. And so I can tell you, as Andrew goes into IKEA, he sees enormous opportunity to take some of the things that he learned in Health & Beauty and grow. Curtis, the last time I looked is an intensely competitive human being. Sometimes we have to coach him not to be so competitive. I'm joking, I've never done that. But he comes out of JD. He comes out of Walmart. His job has been fixing the food business. Tom is now going to challenge himself to grow that business. And so I think overall, we're in a good position to be able to test our leadership and our management while continuing to be able to deliver to shareholders. And I -- as I said in December, I am a big underpromise and overdeliver. And I think our first half reflects we're moving from strength to strength. And I think with this leadership team who are an A team, best team I've ever worked with, we will continue to do that. On the margin piece?

Yes. On the margin, so let me just take you through the key formats. So Health & Beauty, a slightly lower margin. However, Malaysia will recover at some point, right? So we expect that the intensity will come down at some point and margins in Malaysia will recover. The other point on Health & Beauty is the e-com platforms. We are driving really hard our own e-com platforms where margins are much better. So that's the growth opportunity that will improve margins. For Health & Beauty, we expect the second half to be much better than the first half, and we'll end up in the range we've given you in the Investor Day for Health & Beauty. Same for Convenience, it's a small rounding for the first half. For Convenience, the second half and you can see in the past, always significantly better than the first half. So we also expect that to happen for this year and margins will be better for the full year. Now we are on track over the next few years as we grow RTE and grow nonfood, margin mix improves and we get to the range we also indicated in our analyst presentation -- at Investor Day last year. Same for Food, we also expect margins to improve in the second half and IKEA will be flat. So overall, the second half is going to be better than the first half and we are on track to deliver the margins we indicated in our Investor Day last year in December. The question on headwinds.

Go ahead, please.

Look, there's always headwinds. And if you ask a CFO, I only see risks. But on the headwinds, you see that cost prices do increase sometimes because of the oil price increases. So we are, first of all, pushing back on cost price increase to our suppliers. And secondly, if we pass them on, we've been selective. So we will not hurt margins but we also don't want to hurt demand. So it's a art to make sure that's the right balance. But even that in the first half, we have played that really well and we see the margins actually are quite stable and demand is still there, which is most important.

The only thing I'd add is, as a retailer, the worst thing you can do is to have a margin expansion commitment with no levers to pull. The reality is, we have an enormously agile portfolio. We are fully focused on daily essentials. No matter what happens, people are going to eat, they're going to bathe, they're going to want a bottle of water and for some reason, they want a new lamp. In that environment, we have the flexibility to continue to meet our market commitments while also ensuring we have the ability to invest in market in a particular format that we think deserves the attention to gain share. We have the ability to invest in AI as we think about the ability to grow our business and personalize relationship to our customer and make strategic investments without harming that commitment to the market. So I see that the flexibility and the scale of our business is actually a competitive advantage because we don't have to have a trade-off between a strategic investment and our return to our shareholders.

Next question, please.

This is Jeff from CLSA. So again, just going back to -- first on Food. So now I think we are seeing our basket size is trading at discount to the GBA area. So just trying to pick your brain on how do we think about price investment going forward? Is it going to stabilize? Or are we still going head-to-head on onshore retailers here? That's my first question. And the second is more on the Malaysia Health & Beauty promotional spending. Just want to understand the nature of that. Is it a price investment? Or are we ramping up the sales force there? So any color on that would be helpful.

So on the first question, we have achieved the right margin mix and price to customers, where I believe now with that 3% discount and certainly the price comparisons that we do to our competitors here in Hong Kong, we don't need significant investment in price. As a result now, we have the ability to pivot maybe more towards own brand and continue to expand our own brand. We may look at potentially opening new stores again for the first time in a long time here in Hong Kong. I believe, again, margin expansion is an opportunity here in Hong Kong. We don't see the need now to invest into further volume share without value share and positive revenue growth. On Malaysia, it is a highly promotional market. As an everyday low price proponent, I find overpromotion confusing for customers. You go in, you buy one, you get one for free. Well, all that does is it goes in your pantry. If I get -- buy one, get one free shampoo, I'm not washing my hair more often, right? You're forcing me to put more dollar in my pantry than an everyday low price. So we are looking how do we strategically migrate towards that, understanding we're not #1 in the market. We've got a competitor who loves that kind of, I think, superficial value. And we are selectively investing in those promotions where we have to but also in terms of moving more towards an everyday low price model. So it's not an infrastructural investment in terms of significant labor increases or anything. It's very much around this pricing pivot.

Jeff, one more thing on Malaysia. I think Malaysian government issued vouchers called MySARA (sic) [ SARA ] and those vouchers are only -- can only be spent in supermarkets, not in health and beauty stores. So some of the volumes on basic shampoos and basic H&B items moved away from health and beauty channels to supermarkets. And as a result of that, it intensified the competition within the H&B channel. That we think is temporary because those vouchers are not being issued every week, right? They are this year, they might stop at some point in the future. So it is temporary but we're going to make sure as we can, we have to hold on to market share in this period, right? We can say, oh, we want to drive profit. But if you drive profit today, you might be at a big loss tomorrow. So it's a balance.

Next question?

And also congrats to your good result. This is John Lam from UBS. I just have one question. It's more about the store count by segment. So I'm not sure if management could share about the store addition and also store closure by each of the segments. Just want to gauge about your CapEx appetite by different segment.

I don't have the details at hand, John, but where we see the store -- look, we're always closing stores. Every retailer, unprofitable stores, we will close, right? At the same time, we're growing stores. The major growth in the first half this year is mainly in China, 7-Eleven, where we can franchise or also own stores. And secondly it's Indonesia. Yes, we also grow stores in Malaysia and other markets but the bigger growth come from those 2 markets, in line with our growth ambitions we set out earlier last year. We see still that the payback for new stores is very strong. So we see that around 2 years for new store payback. Actually, they've been -- they improved for the last 2 years and they're quite stable as we speak.

Just adding on to that. Asia is quite unique, which is, the opportunity to own stores is pretty low. You go to major mature markets around the world and a big retailer for the most part, will own a portion of the real estate. It's all rental. And if we go back a couple of years ago, we talked about the fact that we brought rents down. But we have 3 plus 3. So we have a good parts of our portfolio every year up for renewal. And that gives us the opportunity when the landlord comes in with a rent increase potentially, to say, you know what, we can go somewhere else. So it gives us a great flexibility. We do want to increase our store count where we see opportunity to continue to grow market share. But what we're finding is that as we have refined our assortment, as we have increased our transactions and we've increased our market share, landlords want us in their malls, landlords want us in their businesses, which has given us a greater negotiating position. And as a result, I think ends with the ability to continue to grow profitably in terms of shareholder returns.

Yes. Maybe last comment on Indonesia because people are very concerned about Indonesia. Actually, our Health & Beauty Indonesia is the best performing business across all the markets. Like-for-likes are really, really high. Profits are exceptionally high, too. And because people still want to spend a little money they have on those things that make them feel good, be it lipstick, be it cosmetics, be it vitamins, that is still very, very essential. So these stores in Indonesia across all our formats and all our areas are actually doing particularly well. So we're actually quite confident that growth will continue.