- Sheng Siong (SGX:OV8)'s 2Q23 results were within expectations. 1H23 revenue and PATMI were 50%/48% of our FY23e forecast. Despite record gross margins, PATMI was down 0.4% y-o-y due to a jump in wages and utilities.
- - Read this at SGinvestors.io -
- New stores, recovery in same-store sales, interest income and higher gross margins will support earnings. But any improvement will be offset by a jump in operating expenses led by utilities and wages. Our FY23e expectations are a modest 1.5% earnings growth.
- No change to our FY23e earnings and target price of S$1.98 for Sheng Siong, pegged to 22x P/E, a 10-15% discount to the 5-year historical average of 25x P/E. We upgrade Sheng Siong to BUY from ACCUMULATE due to the recent performance of the share prices.
The Positives
Same-store sales back to growth.
- - Read this at SGinvestors.io -
Gross margins climb to record levels.
- Read more at SGinvestors.io.
