- Sheng Siong (SGX:OV8)'s 1Q23 results were within expectations. Revenue and PATMI were 26%/25% of our FY23e forecast. PATMI declined 5.3% due to higher operating expenses namely electricity and staff cost.
- - Read this at SGinvestors.io -
- The weakness in same-store sales has improved from a decline of 3.6% in 1Q23 to 1H22 negative 7.0%. Higher electricity expenses of an annualised S$10mil will be a significant drag on operating margins in FY23e. The offset will be higher interest income.
- We maintain our FY23e earnings forecast for Sheng Siong but downgrade our recommendation from BUY to ACCUMULATE due to the recent performance of Sheng Siong's share price.
The Positive
New stores and interest income supported earnings.
- - Read this at SGinvestors.io -
- Finance income spiked by S$2.3mil y-o-y in 1Q23 to S$2.7mil. Sheng Siong’s cash hoard is benefiting from higher interest rates. The cash is parked in fixed deposits.
The Negative
Lagged negative effects of inflation.
- Read more at SGinvestors.io.
