Sheng Siong Group

[edragon]

Lately, there are not many fishes in their aquarium. In fact quite a number of tanks have no fish and some just one solitary fish. Also stock level is much reduced so easier to walk around but less to choose from. Just my observation OR am I too sensitive to their situation.

[yeokiwi]

also, for the better year of 2009/2010, the profit was boosted by other income (almost 13/16 mil), which was not explained(or I did not find it). my guess should be gain from dispose of investments (Citi Group/China Hongxing, etc) from its cash flow statement.

Page 90,91 and 92 of the IPO prospectus..

Other income increased by S$3.0 million or 23.3%, from S$12.9 million in FY2009 to S$15.9 million in
FY2010, mainly due to gains on disposal of available-for-sale equity securities of S$9.6 million and sale
of scrap material. The increase was partially offset by a decrease in the cash grants we received under
the Jobs Credit scheme as the scheme was terminated by the end of June 2010. The equity securities
were sold on market at prevailing market prices to independent third parties.


Except the gain on disposal of equity and job credit, the rest of the "other income" should remain the same.

If gain on disposal and job credit were excluded from FY10, the net profit is around 32.4 million.
EPS post invitation would be around 2.42cts. PE around 13.6

Not too bad but not as exciting as PE 10.

[freedom]

if we remove job credit, as well as gains on disposal of equity security for all 3 years, the average earning of the 3 years should be just around 2 cents post invitation.

job credit in FY 2009, 3.2 mil, FY2010 0.6 mil

gains on disposal of equity in FY 2009 3.1 mil, FY2010 9.6 mil.

PAT in FY2008 20.6 mil, FY2009 33.6 mil, FY 2010 42.6 mil

PAT before EI in FY2008 20.6 mil, FY2009 27.3 mil, FY 2010 32.4 mil

EPS before EI in FY 2008 1.53 cents, FY 2009 2.03 cents, FY 2010 2.41 cents

average EPS over the 3 years, 2 cents, PE 16 - 17


I am not sure whether it is expensive, but definitely it is not cheap.

[uncleti88]

sgxprofits.blogspot.com/2011/08/sheng-shiong-ipo.html

don't know true or not...

[freedom]

you mean China Hongx thing? in FY2010, I think Sheng Siong distribute China Hongx as dividend to its shareholders. not sure how much it is still holding now.

[tienyung]

Hi everyone,

Newbie here. Some pointers I gleaned from Sheng Siong IPO prospectus.
Public Float seems low at 25%. pg 106
Incentive scheme at 2.5% of PBT for the founders (per person). pg 122.

The two points indicate that this stock as a dividend play (which is my original intention) is questionable. The largest shareholders are standing inside, receiving "dividends" before the public.
Also, they have just lost 2 key stores (pg 38) representing approx 15% of revenue.

[pianist]

i was also caught by the EOS scheme which is quite a sizable % against total float?

[d.o.g.]

Some things for investors to consider:

1. Price

12-13x adjusted PE, 3.6x P/B, 0.7x P/sales is no bargain. There are other supermarket companies out there at comparable or cheaper valuations, and who have a much longer track record as a listed company.

2. Return on Assets

Reversing the gigantic dividend paid in FY2010, Sheng Siong still earned 15% on total assets. Most supermarket companies do not earn this much, 3-7% is more common. Dairy Farm, which has bigger economies of scale and higher price points, only averaged 10% over the long term and 13% recently.

Going forward, Sheng Siong's high ROA may not be sustainable.

3. Vendor Sale

30% of the shares offered are Vendor Shares. Should investors be buying when the controlling shareholders (the ultimate insiders) are selling?

4. Employee Stock Option Scheme

The prospectus says the purpose of the ESOS is "essential to enhance our competitiveness as an employer to recruit and retain suitably qualified staff to meet our business needs".

But it also explicitly states that "Controlling Shareholders and their Associates who are employees shall be eligible to participate in the Scheme".

The Controlling Shareholders have already been "recruited". After the IPO they will own 61% of the company, so there is no risk of them leaving to join a competitor i.e. they will definitely be "retained". So why is there a need for the Company to give them options?

The prospectus says they are eligible so that they can "benefit from the Scheme and thereby enhance their long term commitment to the Group". That they will benefit is obvious. But if owning 61% of the company is not enough to ensure their long term commitment, will stock options for another 3.75% (25% of the max 15%) be enough to make a difference?

IMHO the whole thing just smacks of a grab for cash:

1. Insiders selling (cash now)
2. Insiders drawing high salaries (paid before shareholders)
3. Insiders getting ESOS (no downside, all upside)
4. Super-high dividend payout in years 1 & 2 (61% of IPO money paid into insider pockets)

Just my $0.02. As usual, YMMV.

[sgmystique]

While the market has tanked since Sheng Siong listed, the stock is now trading at S$0.445 on very high volumes. That's almost 50% higher than the S$0.31 that it had touched on listing.

Strange are the ways of the market...

[Musicwhiz]

While the market has tanked since Sheng Siong listed, the stock is now trading at S$0.445 on very high volumes. That's almost 50% higher than the S$0.31 that it had touched on listing.

Strange are the ways of the market...

I won't place too much weight on Mr. Market's judgement. More often than not, he's wrong or mistaken.

What I am more interested in will be Sheng Siong's numbers and financials which are essentially a representation of how well the business is doing.