Sheng Siong Group - OCBC Investment 2023-03-01: Healthy Gross Profit Margin

• Gross profit margin improved to 29.4% in FY22.
• Sheng Siong plans to open its 5th store in China by 2Q23.
• A final dividend of S$0.0307 per share was declared.

Sheng Siong reported In-line set of results

• - Read this at SGinvestors.io -
• On a full-year basis, revenue fell 2.2% y-o-y to S$1339.5m while PATMI was up marginally by 0.4% y-o-y to S$133.3m, in-line with our expectations.
• Comparable same store sales decreased 4.8% y-o-y in FY22, but were partially offset by a 2.1% growth from new stores. Gross profit margin increased by 0.7 ppt y-o-y to 29.4% for FY22, largely due to improved sales mix pf higher margin products.
• - Read this at SGinvestors.io -

New store openings supported by growing supply of new HDB flats

• Sheng Siong opened 3 new stores in Singapore in FY22. As of 31 Dec 2022, Sheng Siong has 67 stores in Singapore and 4 stores in China. Sheng Siong signed a lease agreement to open the fifth store in Kunming, China in 2Q23 and plans to open a new store in Singapore in Mar 2023.
• Sheng Siong will continue to seek growth opportunities through expansion of stores in areas without presences. The pace of HDB flat completion in Singapore is expected to remain elevated, leading to an increase in the supply of new HDB shorts for tender. We believe this will support Sheng Siong’s goal of opening 3-5 new stores every year.

A defensive play

• Read more at SGinvestors.io.

Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2023-03-01 SGinvestors.io

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