Sheng Siong Group

[CityFarmer]

I didn't expect the China venture. I am expecting West Malaysia as the first oversea venture of the company.

Anyway, it should be a good news to the company. A 60% share of US$10 mil, or US$6 mil is definitely can be supported by internal resource.

(vested)

------------
The Board of Directors (“Board”) of Sheng Siong Group Ltd. (the “Company” and together with its
subsidiaries, the “Group”) is pleased to announce that the Company has entered into a non-binding
letter of intent (“LOI”) dated 21 August 2014 in relation to a proposed joint venture (“Proposed Joint
Venture”) with Kunming LuChen Group Co., Ltd (昆明绿辰集团有限责任公司) (“LuChen Group”) to
operate supermarkets in the People’s Republic of China (“PRC”).
At this juncture, it is envisaged that: (i) the joint venture company (“JVC”) will have a registered capital
of US$10 million; (ii) the Group will hold 60% of the equity interest in the JVC; (iii) the LuChen Group
will hold 30% of the equity interest in the JVC; and (iv) the Company’s Executive Director, Mr. Tan
Ling San, will hold 10% of the equity interest in the JVC.
http://infopub.sgx.com/FileOpen/SSG_LOI_...eID=311001

[opmi]

Bad move. Competing against global and local supermarkets chains. Logistics also problem.


Sent from my iPhone using Tapatalk

[Ferns]

Dairy Farm is also trying to get a share of China's market. No harm trying now rather than much later. Anyway, since the amount is easily covered with available cash, I think it's worth a try.

[maximillian]

For the board members to approve this decision, it would have been discussed and planned for quite some time.

It appears that one or two of the board members have some exposure in the China market. They are: Lee teck leng, Robson And Goh Yeow Tin(at least have the exposure in Hong Kong) .

I guess this may be a high risk but high reward venture. This is in fact a market seeker business. Maybe the board see something that may be good for the company. I am clueless how it adds value to the supply chain.

Vested.

[riverfish]

------------
The Board of Directors (“Board”) of Sheng Siong Group Ltd. (the “Company” and together with its
subsidiaries, the “Group”) is pleased to announce that the Company has entered into a non-binding
letter of intent (“LOI”) dated 21 August 2014 in relation to a proposed joint venture (“Proposed Joint
Venture”) with Kunming LuChen Group Co., Ltd (昆明绿辰集团有限责任公司) (“LuChen Group”) to
operate supermarkets in the People’s Republic of China (“PRC”).
At this juncture, it is envisaged that: (i) the joint venture company (“JVC”) will have a registered capital
of US$10 million; (ii) the Group will hold 60% of the equity interest in the JVC; (iii) the LuChen Group
will hold 30% of the equity interest in the JVC; and (iv) the Company’s Executive Director, Mr. Tan
Ling San, will hold 10% of the equity interest in the JVC.
http://infopub.sgx.com/FileOpen/SSG_LOI_...eID=311001

When you partner with a Chinese, I would expect that the Chinese partner get the majority share, rather than the Singaporean partner. Because the Chinese partner being the one familiar with local conditions, may not be contented with being a minority shareholder for long - I mean why should they slog for the big foreign shareholder?

No wonder the share chiong so much this morning.

I think Sheng Siong should focus on gaining a more solid footing in Singapore, gaining greater economies of scale & fighting NTUC & Cold Storage dominance, before contemplating overseas venture.

[CityFarmer]

OSK DMG Analyst Report, TP $0.83, rating BUY, after the recent China venture announcement.

(vested)

--------
Sheng Siong announced it has entered into a non-binding letter of
intent (LOI) in relation to a proposed joint venture with Kunming Luchen
Group (Luchen Group) to operate supermarkets in China. Having earlier
identified overseas forays as a possible stock catalyst, we are positive
on this development, as it could open up a new growth market for
Sheng Siong. Maintain BUY with a TP of SGD0.83.
http://rhbosk.ap.bdvision.ipreo.com/NSig...cd99cd.pdf

[CityFarmer]

I think Sheng Siong should focus on gaining a more solid footing in Singapore, gaining greater economies of scale & fighting NTUC & Cold Storage dominance, before contemplating overseas venture.

The company should be able to do both at the same time.

Both gross margin and net margin of Singapore business are improving. The uptrend will continue for another 1-2 quarters at least. The Singapore business plan is also well-planed till 2017, the rest is execution.

(vested)

[CityFarmer]

I chose to post the article here, as a competitor of the company. The NUTC online portal has been revamped recently, after the success of others?

The delivery schedule lead time improved from previously 2 days, to now 1 days, but the delivery slot is still 4 hours, which is longer than others.

The fresh items still lacking comparing with the company online offerings.

The following service is unique to NTUC at the moment, but I doubt the usefulness of the service.

(vested)

New online shopping service at NTUC FairPrice

SINGAPORE — Buying groceries and household appliances could now be easier for customers of NTUC FairPrice, with a new service that allows shoppers to buy items online and then collect them at the stores.

Using Click&Collect — the first of such services here in Singapore — customers can collect their online purchases any time of the day for S$3 from seven outlets, including those at East Coast Road, Bedok North Street and Zhongshan Park. By next year, FairPrice hopes to expand the service to 20 more stores.

This will enable customers to avoid long queues and get hold of items which may be not be available at all stores.

The new service comes after management received feedback about NTUC FairPrice’s home delivery services, which could be troublesome when no one is home to receive the items.
...
http://www.todayonline.com/singapore/new...-fairprice

[CityFarmer]

Ops. I am wrong in assuming the company is able to support the new Singapore strategy with internal resources. The company has to go with placement route instead.

How wrong am I? The placement is at 5.37% discount, and with dilution of close to 8%. Well, it seems not too wrong I am, with the anticipated growth of the new Singapore strategy.

The SGX announcement is here
http://infopub.sgx.com/FileOpen/2014%200...eID=313647

(vested)

Sheng Siong plans placement of 120 mil shares at 67 cents each to raise $80.4 mil

Sheng Siong Group is proposing to place out 120 million shares at 67 cents each.

The placement price represents a discount of 5.37% to the volume weighted average price of $0.708 for trades done on the SGX on Sep 3.

The placement shares represent 7.98% of the enlarged issued share capital of 1.5 billion shares after the issuance and allotment of the new shares.

The placement will allow the company to raise gross proceeds of $80.4 million.

The group intends to use 98% to 99% of the gross proceeds will be used to finance the future expansion plans of the group in Singapore which includes the acquisition of properties for new retail outlets.

Sheng Siong says it intends to continue to distribute up to 90% of its net profit after tax to its shareholders for the financial years ending 31 December 2015 and 31 December 2016 as dividends.
http://www.theedgesingapore.com/the-dail...4-mil.html

[thefarside]

They probably find it easier to buy than to overcome the odds stacked in favour of Fairprice when it comes to rental of choice locations in new estates.

Considering the share price trade at a quite a good multiple to earnings it makes sense to do a placement to raise funds rather than cut dividends and redirect internally.