Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

<ul>
<li>Q1 FY24 revenues/profits were up 5.5%/9.3% YoY as inflationary pressure in Singapore force consumers to adopt cost-cutting measures like eating at home and shopping in supermarkets with value for money.</li>
<li>Cash continued to pile on the balance sheet with &gt;350 mn SGD ( now almost 15% of market capitalization). Capital allocation (besides a 70% pay out ratio) is key now. </li>
<li>Trading at 16.5x PE with ROEs consistently over 25% and a dividend yield of 4.3%, this is one of the rare quality companies in Singapore worth exploring </li>
</ul>


Q1 FY24 revenues/profits were up 5.5%/9.3% YoY as inflationary pressure in Singapore force consumers to adopt cost-cutting measures like eating at home and shopping in supermarkets with value for money.
Cash continued to pile on the balance sheet with &gt;350 mn SGD ( now almost 15% of market capitalization). Capital allocation (besides a 70% pay out ratio) is key now. 
Trading at 16.5x PE with ROEs consistently over 25% and a dividend yield of 4.3%, this is one of the rare quality companies in Singapore worth exploring 


Sheng Siong Group (SSG SP) Q1 2024: Making a Strong Case for Growth This Year

<ul>
<li>Despite margin pressure, <a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> delivered resilient earnings for FY23. Revenue was up 2.3% YoY, and profits were up 0.3% YoY. </li>
<li>The company guided it had opened two additional stores at the start of 2024 (2023 end: 69), and six more locations were up for tender in 2024. </li>
<li>The stock trades at 17x FY23, with a 4% dividend yield and 15% of the market cap in cash. Margin pressure due to inflation will be a headwind in FY24. </li>
</ul>


Despite margin pressure, Sheng Siong (SSG SP) delivered resilient earnings for FY23. Revenue was up 2.3% YoY, and profits were up 0.3% YoY. 
The company guided it had opened two additional stores at the start of 2024 (2023 end: 69), and six more locations were up for tender in 2024. 
The stock trades at 17x FY23, with a 4% dividend yield and 15% of the market cap in cash. Margin pressure due to inflation will be a headwind in FY24. 


Sheng Siong (SSG SP) FY23: Resilient Earnings Despite Margin Pressure, FY24 Flattish

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<li>
<a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> continues to maintain steady, low, single-digit growth in revenue and flat profitability despite a challenging environment. </li>
<li>Inflation trends reversing due to lower power costs in 2024, and an improvement in its product mix could lead to increased low double-digit profitability (10-11% YoY). </li>
<li>Trading at 18.5x/17.6x FY23e/24e PE and 3.9% dividend yield, the stock remains on our watchlist if a correction leads to a favorable entry point.</li>
</ul>



Sheng Siong (SSG SP) continues to maintain steady, low, single-digit growth in revenue and flat profitability despite a challenging environment. 
Inflation trends reversing due to lower power costs in 2024, and an improvement in its product mix could lead to increased low double-digit profitability (10-11% YoY). 
Trading at 18.5x/17.6x FY23e/24e PE and 3.9% dividend yield, the stock remains on our watchlist if a correction leads to a favorable entry point.


Sheng Siong (SSG SP) - Great Execution So Far, Maintaining >20% ROCE

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> reported another resilient quarter with revenue growth at 4.7% YoY and profit growth flat, with annualized ROCEs at 27%. </li>
<li>Net cash grew to 289 mn SGD (highest ever now at 12% of market capitalization). The company is expected to expand by 3-4 stores in FY23 for Singapore.</li>
<li>While the stock is not cheap at 19x/18x FY23e/FY24e and 3.8% dividend yield, we see prospects for margin expansion in further quarters as execution remains high quality.</li>
</ul>



Sheng Siong (SSG SP) reported another resilient quarter with revenue growth at 4.7% YoY and profit growth flat, with annualized ROCEs at 27%. 
Net cash grew to 289 mn SGD (highest ever now at 12% of market capitalization). The company is expected to expand by 3-4 stores in FY23 for Singapore.
While the stock is not cheap at 19x/18x FY23e/FY24e and 3.8% dividend yield, we see prospects for margin expansion in further quarters as execution remains high quality.


Sheng Siong (SSG SP): Another Resilient Quarter, Cash Pile Growth Continues

<ul>
<li>It attracts investors when a company's 15-year ROCE averages over 25% (and has never gone below 20%). <a href="https://www.smartkarma.com/entities/sheng-siong-group-ltd" target="_blank" data-smartkarma-citation="entities:6824:1" rel="noopener">Sheng Siong (SSG SP)</a> is one of those companies.</li>
<li>With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.</li>
<li>We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.</li>
</ul>


It attracts investors when a company's 15-year ROCE averages over 25% (and has never gone below 20%). Sheng Siong (SSG SP) is one of those companies.
With 13% of the market capitalization in net cash (283 mn SGD) and a payout ratio averaging 70%, the stock trades at a yield of almost 4%.
We believe the store expansion of 3-4 stores/year ( on a base of 67) in Singapore is possible, given the pipeline of HDB tenders.


Sheng Siong (SSG SP): Steady At Execution, Good Long-Term Play

Singapore

Sheng Siong Group Ltd is a retailer in Singapore.  The Company operates a groceries chain across Singapore. Sheng Siong's stores provide fresh and chilled produce, seafood, meat and vegetables, processed, packaged and preserved food products as well as general merchandise such as toiletries and essential household items.

Sheng Siong (SSG SP)

Sheng Siong Group (SSG SP) Q1 2024: Making a Strong Case for Growth This Year

We summarize the Q1 earnings of Sheng Siong Group trading at 16.5x PE with ROEs consistently over 25% and a dividend yield of 4.3%

Sameer Taneja