Sheng Siong (SGX:OV8)'s 4Q22 results were within expectations. Excluding a one-off marketing rebate of S$6mil, FY22 revenue and PATMI were 101%/100% of our forecast.
Sales was supported by the return of new stores. The number of new stores increased by three to 67 and raised retail area by 5.4% in FY22.
- Read this at SGinvestors.io -
With re-opening and dining out, fresh food sales mix may hit the ceiling in the near term. A future catalyst will be China. Contribution is small currently with 4 stores, but we expect a planned roll-out to 15-20 stores to achieve scale.
We raised our FY23e earnings forecast for Sheng Siong by 6% to S$135.4mil on more resilient margins and a higher store count. Our BUY recommendation for Sheng Siong is maintained.
The Positive
Back to new stores for growth.
- Read this at SGinvestors.io -
Separately, the average size of the store is also larger with a minimum of 5,000 sft.
The Negative
Gross margins may hit a ceiling temporarily.
Read more at SGinvestors.io.
Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
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