Sheng Siong - OCBC Investment 2024-04-04: Store Opening Likely To Accelerate In FY24

• According to Singapore Department of Statistics, retail sales in Singapore increased 1.3% y-o-y in Jan 2024, compared to a 0.5% decline in Dec 2023.
• Within the retail trade sector, performance was mixed. Sales of motor vehicles grew 37.3% y-o-y while sales of food & alcohol, and watches & jewellery rose 8.5% and 5.3% y-o-y respectively.

Supermarket & hypermarket sales declined 6.5% y-o-y in Jan 2024

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• On a seasonally adjusted month-on-month basis (MoM), supermarkets & hypermarkets sales grew 10.6%.
• Overall, sales of supermarkets & hypermarkets have seen a declining y-o-y trend since May 2022, normalizing from its elevated sales during COVID-19 period.

Sheng Siong’s share price down 4% year-to-date

• Sheng Siong's share price was down 4% year-to-date, likely due to concerns over its slower revenue growth and margin expansion in 4Q23. Gross profit margin (GPM) improved from 29.25% in 4Q22 to 30.3% in 4Q23 but was down 0.05 percentage points (ppts) q-o-q from 3Q23.
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• Sheng Siong has renewed electricity contract for FY24 at lower tariffs and continues to roll-out more self-checkout machines at its stores to improve labour productivity.

On track to reach its target of opening at least 3 new stores in 2024

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OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2024-04-04 SGinvestors.io

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