Sheng Siong Group

in asset inflation, ownership is blessing. in asset deflation, it is a curse.
Go for the middle path. 50% ownership- 50% rental.

If dont own, will be at mercy of landlord. E.g. Isetan. Board said before they cannot sell their Wisma annex.
If not, they will have no bargaining power in negotiating with other location's landlords. e,g, Lido outlet.

Just see HK to know better for retail/food to have some property to hedge.

AlphaQuant has elaborated much better and elegantly than I did. IIRC I think there were 2 shops closed as lease up including one near LionCity. Nonetheless stock is due for review with this change in strategy.

Another property purchase, after the previous one in Yishun?

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OPTION TO PURCHASE COMMERCIAL PREMISES SITUATED AT
BLOCK 71 KALLANG BAHRU #01-531 SINGAPORE 330071

The Board of Directors of Sheng Siong Group Ltd. (the “Company”, and together with its subsidiaries, the “Group”) wishes to announce that the Company’s wholly-owned subsidiary, Sheng Siong Supermarket Pte Ltd (the “Purchaser”), has been granted an option to purchase dated 10 December 2013 (the “Option”) by Mr. Koh Kian Hong (the “Vendor”) to acquire the commercial premises (“Property”) situated at Block 71 Kallang Bahru #01-531 Singapore 330071 (“Proposed Acquisition”) for a consideration of S$13.5 million (“Consideration”).

Ref: http://infopub.sgx.com/FileOpen/KallangB...eID=267557

There is a Fairprice on the 2nd floor, same block!

http://directory.stclassifieds.sg/singap...g+bahru/q/

What are they trying to do? Head on with Fairprice?

The Yishun and Kallang properties will cost 54.9+13.5 = 68mil. As of 9M13, there is ~107mil of cash on the BS (and 76mil payables). Does it seem like it has to start taking up debt or reducing its famed 90% dividend payout ratio?

With the purchase of property rather than leasing, operating lease commitment is being translated to debt on the BS now. The prospectus had revealed that SSG had divested a couple of properties to E Land (owned by the LIM brothers) and then leased it from them, conventional window dressing of the balance sheet before IPO. Are we going to see the reversal soon?

It makes sense to buy these commerical properties, after all they will appreciate in price in the long run!
Or sell it cheap to the LIM Brothers and lease it back! win-win mah! :O

I guess it depends on the investment horizon. I think we all agree that SS can weather most storms based on their business model.

Looking at it on the long term, I would feel that buying properties in land limited Singapore serves as a solid business plan. No doubt in the short term, the balance sheet and cash flow (and dividends) may be affected but long term, they won't be at the mercy of the landlord. As someone mentioned before, hedge against rental spikes.

I'm not sure what's going to happen next year or the year after but I'm long SS. Similarly with some of our reits that's currently taking a short term beating.

(12-12-2013, 10:53 PM)brattzz Wrote: It makes sense to buy these commerical properties, after all they will appreciate in price in the long run!
Or sell it cheap to the LIM Brothers and lease it back! win-win mah! :O

(12-12-2013, 10:53 PM)brattzz Wrote: I guess it depends on the investment horizon. I think we all agree that SS can weather most storms based on their business model.

Looking at it on the long term, I would feel that buying properties in land limited Singapore serves as a solid business plan. No doubt in the short term, the balance sheet and cash flow (and dividends) may be affected but long term, they won't be at the mercy of the landlord. As someone mentioned before, hedge against rental spikes.

I'm not sure what's going to happen next year or the year after but I'm long SS. Similarly with some of our reits that's currently taking a short term beating

Personally, i find it puzzling that it can be a 'win-win' in an IPT scenario. My gut sense advises me to read between the lines and maximise my common sense thinking whenever it surfaces.

I am also generally wary when everyone (management, investors) start talking about the 'long term'. To have a long term, we first need to survive the short term and then prosper in the medium term. Is long term talk a convenient reliever for short term pain?

SSG has a robust business model and it takes something to rise up and find its own feet in a small crowded market like Singapore, especially with government-backed NTUC. Moreover, it is subjected to positive investor bias (most investors can see, touch and observe its operations). But at the end of the day, PRICE will be a strong determinant of future LONG TERM returns.

During the period, where the company seems revising its business strategy, the CFO resigned. Is it a coincident?

Ref: http://infopub.sgx.com/Apps?A=COW_Corpor...q7IRPQeSYI

Maybe because the CFO is part of the lim family? Lol