Sheng Siong kept at ‘buy’ with 95 cents fair value by OCBC
27 Oct 2015, 11:56 am
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SINGAPORE (Oct 27): OCBC is keeping its “buy” recommendation for Sheng Siong Group with a fair value of 95 cents as new stores continue to drive growth.

In a Tuesday report, lead analyst Jodie Foo says Sheng Siong’s 3Q15 results met its expectations, as revenue grew 7.3% to $200 million, making up 25.9% of its FY15 forecast.

Net profit also increased 18.7% to $14.5 million, constituting 26.8% of its FY15F projection.

The group’s new stores contributed 6.2% to its revenue growth, while 1.1% came from old stores, an improvement from the 0.3% seen in 2Q.

Sheng Siong also managed to keep its gross profit margin steady versus the 24.2% seen in 3Q14, as the group is still reaping efficiency gains from their warehouse.

“We expect overall margins for FY15 to be at least 24.5%,” says Foo.

Meanwhile, Sheng Siong signed another lease with HDB for a 4,300 sf store at Dawson Road, Singapore, which is expected to be operational on Nov 15.

The group’s balance sheet also remained healthy with net cash of $126 million.

“We keep our estimates largely unchanged and maintain our BUY rating with fair value estimate of S$0.95,” says Foo.

Sheng Siong is trading flat at 88 cents.

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