Case Study on Sheng Siong Group (SGX: OV8)

Date: 25 October 2018

The Company was incorporated in Singapore on 10 November 2010 under the name of Sheng Siong Group Pte Ltd. The Company changed its name to Sheng Siong Group Ltd on 4 July 2011 in connection with its conversion to a public company limited. The Group comprises the Company and its subsidiaries, SS Supermarket, CMM Marketing and SS Malaysia.

The Group is primarily engaged in operating the Sheng Siong groceries chain. Its stores are located in the heartlands of Singapore, designed to provide customers with both wet and dry shopping options as well as general merchandise such as toiletries and essential household products. The Group also developed a their housebrands product to offer customers quality alternatives to national brands at substantial savings. To support its retail operations, the Group also has an extensive distribution network, food-processing facilities, and warehousing facilities. In May 2011, the Group completed construction of its new corporate headquarters and warehousing and distribution centre at Mandai Link.

Honestbee latest offering, Habitat by honestbee, is the world first tech-integrated multi-sensory grocery and dinning destination of its kind defines the NEW retail landscape.

With innovation being the key driver in today’s environment, what is the outlook for Sheng Siong in its niche positioning of being a heartland supermarket brand? How can it defend its market share against e-commerce players in this competitive landscape?

Sheng Siong Supermarket was founded in 1985 by the Lim brothers (Lim Hock Eng, Lim Hock Chee and Lim Hock Leng) when they started their first Sheng Siong store in Ang Mo Kio Ave 3, which is still in operation today. They are currently on track to open its 50th store this year.

In a recent interview with The Business Times, CGS-CIMB analysts indicates Sheng Siong as “no lack of opportunities” for further growth over the next four years.

Let’s look at how Sheng Siong Group is scoring based on ShareInvestor’s grid:

With its IPO price at 0.33 cents in August 2011, the group has increased to 1.10 cents as of 24 October 2018, with a 4.76% on just that day alone.

In terms of price movement, even when there is a slight decline in its year on year high, there is a strong support for its incremental year on year low.

Reviewing historical CAGR data, the company is also showing positive performances across the ups and downs of both business and market cycles.

However, considering that CAGR does not reveal growth volatility, we can look at forword estimate to have a sensing of the pace of growth and momentum that can be carried into future years.

With strong estimates put forth by the analysts based on growth forecast, 5 analysts reviewing Sheng Siong as BUY and 2 as Hold in October 2018.

Looking further into its cash flow estimates, it is also showing a positive set of numbers based on declining capital expenditure and an increasing 43% free cash flow on actual 12 months trailing (Jun 2018) vs Dec 2020 full year estimates.

Despite the fact that Sheng Siong does not have a competitive advantage versus the evolving landscape, is it still a good stock to include in your portfolio? Leaving you with ShareInvestor’s consensus estimates.


To gain more insights of stocks using ShareInvestor’s webpro, please visit http://www.shareinvestor.com/sg

Happy investing!

Educator Index

Archive

2018
December
September
October
November
October
November
October
September
August
July
June
May
April
March
February
January
2017
October
September
August
July
June
May
April
March
February
January