Sheng Siong Group

[Tiggerbee]

JP Morgan TP 82 cts.

https://markets.jpmorgan.com/research/em...-1529556-0

3Q14 results: Steady operational performance, slight miss on earnings due to higher wage provision

· Operating performance remains steady: Sheng Siong reported 3Q net profit growth of 15.4% YoY, about 5% below our estimate, missing mainly due to higher provision for employee bonuses linked to financial performance of the company and higher-than-expected tax rate. Operating parameters remained steady with 4.8% YoY growth in revenues (JPM estimate of 5% YoY growth). Same-store sales growth in 3Q was 3.4%, broadly in line with our expectations. Total retail area remained steady at 400K sq.ft with no new outlets opened in 3Q.

· Gross margin expansion continues: Gross margin in 3Q expanded 100bps YoY to 24.2%, continuing the trend from the past few quarters. Better product mix (rising share of fresh food), better sourcing and higher share of private label products is driving gross margin improvement, a trend we expect to continue. 3Q EBIT grew 16.6% YoY, with EBIT margins expanding 80bps.

· New store opening in 4Q14, after a 6 quarter hiatus: Sheng Siong has signed a new store lease for 4000 sq.ft of space located in an amenity centre for foreign workers in the Penjuru area. This store is expected to be operational by November 2014 and should aid revenue growth in 4Q. However, management has noted that competition for retail space in new HDB areas remains challenging and the company is evaluating opportunities to purchase real estate.

· Cash generation remains strong: Sheng Siong has generated free cash (post interim dividend payout) of SGD79m over 9m2014 and has total cash balance of SG$179m as of end 3Q. We believe the company is on track to maintain its dividend payout at historical levels of about 90% going forward. We estimate dividend yield of 6.3% for 2015/16E, based on our estimates.

(Vested)

[Harvest Time]

Sheng Siong Group maintained at “add” by CIMB with 77 cents target price
By PC Lee / TheEdge Markets.com | October 29, 2014 : 4:24 PM MYT

SINGAPORE (Oct 29): CIMB ( Financial Dashboard) is keeping its “add” rating for Sheng Siong with a higher target price of 77 cents. The research house is sticking with its FY14-16 forecasts while looking forward to the opening of more stores as well as higher visibility for its China expansion plans.
...
http://www.theedgemarkets.com/sg/article...rget-price

Thanks for the info.

A good call from CityFarmer.

[CityFarmer]

My current fair value of the company is approx 73 cents, base on the following

- Estimated EPS FY2014 of 3.2-3.3 cents per share
- Expected Dividend FY2014 of 2.9-3.0 cents per share.
- Fair value base on ~4% dividend yield, PE of between 20-25.

Will the similar growth rate for FY2015? I remain cautiously optimistic. An increase in GFA, SSS growth, and contribution from online stores, are key drivers to sustain the similar growth rate.

(vested)

[riverfish]

Sheng Siong’s strategy as a low-cost neighbourhood supermarket player, with a niche focus in fresh seafood & poultry

Given the intense competition in the local supermarket scene, I think it has adopted the right strategy in avoiding head-on competition with NTUC & Cold Storage, which are usually well-located in MRT stations & shopping malls & well-established posh neighbourhoods. Instead it has focused on taking over the role of traditional wet markets in the suburbs, by being the alternative to the wet market.

Here are my general views after visiting two outlets:-

Hygiene standards not up to scratch: some staff at the outlets were not wearing gloves. I saw the staff handling fish and cutting meat with bare fingers. At Cold Storage, the staff were at least wearing gloves in the hand cutting the meat. At Giant at Vivo City, the staff wore gloves in both hands. In all the supermarkets, none of the staff wore face masks, which I think they should.

If Sheng Siong is going to establish itself in poultry & fish retailing segment, setting exemplary hygiene standards goes towards consolidating its reputation as a serious player in this sector.

Yishun Central 925 Supermarket, Blk 925 Yishun Central 1 #01-211 (about 6 mins’ walk from Northpoint Shopping Centre)

It is tucked away in a quiet sleepy corner amidst the HDB heartland shops. I visited it on a Saturday late morning/noon time. There weren’t many customers, no queues being the cashier’s counters, roughly one or two persons at each cashier’s counter. Certainly doesn’t bode well for business in that branch, if it is so quiet on a Saturday late morning!

I suspect they may close down the outlet after the new outlet in Junction 9 Yishun opens. I can understand why they were willing to buy the outlet in Junction 9 despite the price tag. Because with a slightly off location like Yishun Central 925, pple don’t seem to be willing to take a detour there when they have Cold Storage in Northpoint and NTUC at Yishun MRT station. NTUC outlet at Yishun has very limited poultry & fish selections. Cold Storage with its much bigger space in Northpoint has a fine selection of poultry, hams, fresh cheese, olives & fish.

Woodlands 301 Supermarket, Blk 301 Woodlands St 31 #01-217 Singapore 730301 (across the road from Marsiling mrt station)

There is a small NTUC outlet at Marsiling MRT station. It has very limited poultry & fish selections.

The Sheng Siong outlet has goods displayed both within and outside the shop, messy very cramp Chinaman-style supermarket. Business is brisk. It has a sizeable seafood & poultry section, with live fish swimming in tanks. Location is good, because it is just across the road near Marsiling MRT station, surrounded by clusters of HDB flats nearby and I don’t see any sizeable NTUC supermarkets, Giant or Cold Storage nearby. The NTUC outlet at the MRT station is no competition where poultry & seafood is concerned.

[muns]

Sheng Siong’s strategy as a low-cost neighbourhood supermarket player, with a niche focus in fresh seafood & poultry

Given the intense competition in the local supermarket scene, I think it has adopted the right strategy in avoiding head-on competition with NTUC & Cold Storage, which are usually well-located in MRT stations & shopping malls & well-established posh neighbourhoods. Instead it has focused on taking over the role of traditional wet markets in the suburbs, by being the alternative to the wet market.

Here are my general views after visiting two outlets:-

Hygiene standards not up to scratch: some staff at the outlets were not wearing gloves. I saw the staff handling fish and cutting meat with bare fingers. At Cold Storage, the staff were at least wearing gloves in the hand cutting the meat. At Giant at Vivo City, the staff wore gloves in both hands. In all the supermarkets, none of the staff wore face masks, which I think they should.

If Sheng Siong is going to establish itself in poultry & fish retailing segment, setting exemplary hygiene standards goes towards consolidating its reputation as a serious player in this sector.

Yishun Central 925 Supermarket, Blk 925 Yishun Central 1 #01-211 (about 6 mins’ walk from Northpoint Shopping Centre)

It is tucked away in a quiet sleepy corner amidst the HDB heartland shops. I visited it on a Saturday late morning/noon time. There weren’t many customers, no queues being the cashier’s counters, roughly one or two persons at each cashier’s counter. Certainly doesn’t bode well for business in that branch, if it is so quiet on a Saturday late morning!

I suspect they may close down the outlet after the new outlet in Junction 9 Yishun opens. I can understand why they were willing to buy the outlet in Junction 9 despite the price tag. Because with a slightly off location like Yishun Central 925, pple don’t seem to be willing to take a detour there when they have Cold Storage in Northpoint and NTUC at Yishun MRT station. NTUC outlet at Yishun has very limited poultry & fish selections. Cold Storage with its much bigger space in Northpoint has a fine selection of poultry, hams, fresh cheese, olives & fish.

Woodlands 301 Supermarket, Blk 301 Woodlands St 31 #01-217 Singapore 730301 (across the road from Marsiling mrt station)

There is a small NTUC outlet at Marsiling MRT station. It has very limited poultry & fish selections.

The Sheng Siong outlet has goods displayed both within and outside the shop, messy very cramp Chinaman-style supermarket. Business is brisk. It has a sizeable seafood & poultry section, with live fish swimming in tanks. Location is good, because it is just across the road near Marsiling MRT station, surrounded by clusters of HDB flats nearby and I don’t see any sizeable NTUC supermarkets, Giant or Cold Storage nearby. The NTUC outlet at the MRT station is no competition where poultry & seafood is concerned.

Always great to do on-the-ground research!

Is their Tampines outlet Q12015 opening still on schedule and would they be using all three levels for their supermarket operations in future?

At the moment only 1 of the floors seemed to be used as the other leases haven't ran out. But after they run out, have they proposed any plans for it?
______________________________________________________
Finding the Value in a Speculative World
http://www.valueinvestasia.com

[thor666]

Let me share an observation I have.

I understood the fresh seafood and poultry leaves much to be desired. That draws main attention.

There is another observation that I had. Sheng siong probably carries more canned food per sq ft than ntuc or cold storage. And most of their other foods are dried foods.

These imo, are not a mere coincidence. Ss is targeting the low to low-med wage shoppers. Cannedand dry foods are usually the cheapest options for such consumers.

Hope this observation helps forummers get a further insight.

(Not vested)

Sent from my D5503 using Tapatalk

[opmi]

Another observation.

Comparing to Fairprice, Zheng Siong seems to have less house brands. Fairprice probably track sales of products and come out with their own house brand. Eg. Fairprice recently sells their own brand of Multi-Grain bread, similar to the Gardenia one. At 20% cheaper.


Sent from my iPhone using Tapatalki

[CityFarmer]

I do agree that store expansion will be crucial over the next two years for Sheng Siong, to retain the same growth.

The dateline of end Dec is coming, but we don't hear the news of Tampine's HDB approval yet?

(vested)

Sheng Siong kept at ‘buy’ by OCBC with 77 cents fair value

SINGAPORE (Dec 10): OCBC Investment Research is maintaining its buy call on supermarket operator Sheng Siong with a fair value of 77 cents.

In a report out today, analysts Jodie Foo and Andy Wong Teck Chin expect new stores to contribute in FY15 although growth may see moderation.

As for its plans in to expand into China and e-commerce, OCBC does not consider these to be catalysts yet as it is still early days.

In 4Q14, Sheng Siong’s new 4,000 sq ft store in the Penjuru area targeted at residing foreign workers has started operations, bringing the total number of stores in Singapore to 34.

And if management succeeds in its push to open the 9,800 sq ft store at Block 506 Tampines Central 1 before the Lunar New Year, the company could benefit from higher sales during the festive season.

Meanwhile, store expansion will be crucial over the next two years for Sheng Siong, says OCBC.

This is because growth in the eight new stores added in 2012 is normalising and the 42,000 sq ft Woodlands store is expected to close by 2Q17.

And while the 19,000 sq ft Yishun J9 store is slated to open in 2017, it would partially offset the revenue loss as a new store needs time to achieve optimum growth rates.

Still, by holding a significant cash balance, Sheng Siong has shown that it is ready to capture opportunities to ensure its business continue to generate steady sales growth in the coming years.

“At this juncture, we expect growth to moderate in the near-term and revise our assumptions for revenue growth in FY14F/FY15F to 5.5%/5.2% (previous: 6.5%/6.0%),” say the analysts.

Sheng Siong is down 0.8% to 65.5 cents as at 12:56 p.m.
http://www.theedgemarkets.com/sg/article...fair-value

[CityFarmer]

Mr. Lim Hock Chee's spouse, Mdm. Lee Moi Hong accumulated 1.65 million share of the company, in the last 1-2 month, @ prices of 64-65 cents.

http://infopub.sgx.com/Apps?A=COW_CorpAn...VJlxMl4B_g

http://infopub.sgx.com/Apps?A=COW_CorpAn...VJlxS14B_g

http://infopub.sgx.com/Apps?A=COW_CorpAn...VJlxVV4B_g

(vested)

[greentea]

http://businesstimes.com.sg/companies-ma...s-in-china

Sheng Siong signs joint-venture deal to run supermarkets in China
By
Claire Huanghuangjy@sph.com.sg@ClaireHuangBT
28 Dec7:07 PM
SINGAPORE-LISTED Sheng Siong Group has signed a conditional joint-venture (JV) agreement with Kunming LuChen Group Co Ltd to operate supermarkets in China....