Sheng Siong caters to the mass market segment, with stores located mainly in HDB estates.
Total outlets = 33
Total retail area = 400 000 sq ft
Total no of shares = 1 503 537 000
Major shareholders (before placement of 120 000 000 shares):-
1. SS Holdings - 32.4%
2. Lim Hock Chee - 12.3%
3. Lim Hock Eng 12.3%
Free float 30.6%
Latest quarterly financial report (2Q2014)
Revenue - $171.6 mil
Net profit - $11.075 mil (30.3% increase over corresponding period the year before)
Earnings per share (full year) – 2.59 cents
1. Defensive counter with 4% dividend yield.
2. Sheng Siong has distributed 90% of profits as dividends since listing.
3. Not only is Sheng Siong debt-free, it has cash holdings of $95.6 million (as of 30 Jun 2014).
4. Sheng Siong is in the recession-proof business. More are likely to buy groceries than to dine-out during a recession.
One of Warren Buffett's major investments is Walmart, USA biggest supermarket.
5. Low rental expenses with mainly HDB and JTC leases versus competitors’ rental expenses at shopping malls and commercial properties.
6. Sheng Siong distribution centre at Mandai – enjoy economies of scale savings.
7. Present share price valuation is much lower than that of competitor Dairy Farm.
8. Sheng Siong has taken market share away from its competitors (2Q2014 financial report).
1. More housebrands being introduced.
2. More 24-hour outlets.
3. Any new outlet open will be a major earnings catalyst.
4. New online portal will contribute to more profits.
5. More retail space in future
– bought 19 000 square feet of retail space in Yishun (cost $55 million, with $6.1 million paid) and 36 000 square feet of retail space in Tampines
6. Started a joint venture (60% share) to enter China market
Target prices by houses:
83 cents (OSK DMG) – 25.08.2014
76 cents (OCBC) – 25.07.2014
85 cents (DBS) – 25.07.2014
79 cents (CIMB) – 24.07.2014
82 cents (JP Morgan) - 2014
With rising costs and increased learning needs, financing our children's education is no longer a simple walk in the park. Discuss with other parents about how they are managing their finances to cope with their expenses.