Sheng Siong Group - DBS Research 2023-10-30: Sourcing The Best Deals For Customers

• Sheng Siong (SGX:OV8) reported solid quarter, but wages and utilities continue to weigh on profits.
• 9M23 results tracking our FY23 estimates on sustained gross margins and same-store sales resuming growth.

3Q23 revenue increased 3.7% y-o-y to S$345.8m.

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• Same-store sales grew 1.8% in 3Q23 and 0.2% in 9M23, marking a return to growth after five consecutive quarters of decline.
• New store openings also contributed a 2.2% y-o-y sales uplift in 3Q23. Growth was offset by the closure of its Yishun Central store, as the lease expired (-0.2%), and relatively flat performance in China (-0.1%).

3Q23 earnings rose 6.0% y-o-y to S$34.7m.

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• In terms of gross margin, it expanded y-o-y from 29.4% in 3Q22 to 30.3% in 3Q23.
• Net interest income also increased substantially from S$1m in 3Q22 to S$2.8m in 3Q23, as Sheng Siong was able to obtain ~4% interest on its substantial cash reserves.

Company continues to maintain high cash balance, at S$289m.

• Read more at SGinvestors.io.

Zheng Feng CHEE DBS Group Research | Andy SIM CFA DBS Research | https://www.dbs.com/insightsdirect/ 2023-10-30 SGinvestors.io

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