shengsiong-ocbc
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.