SHENG SIONG GROUP LTD
OV8.SI
Sheng Siong Group - Reiterating buy
- After Sheng Siong Group’s latest 3Q16 results in late Oct, we have seen a correction in its share price to current levels.
- Besides the general heightened risk following the US elections and potential repercussions for Singapore’s economy, more specifically to the group, we acknowledge the concerns on growth ahead and the anticipated store closures next year for its ~41.5k sq ft Woodlands store and most likely, the 45k sq ft store in The Verge.
- Amid challenging operating conditions, competition has also been strong for the local grocery sector and may further increase with new entrants in the market.
- Notably, earlier this month, news of Amazon coming to Singapore has made waves in the retail sector, and the company is likely to offer selected services including its AmazonFresh grocery service.
- While this has yet to be officially confirmed, all considered, at current levels, we reiterate BUY with fair value estimate of S$1.15 given the group’s defensive business aided by its value positioning in the market, steady growth driven by new stores, net cash of S$46m (as of 30 Sep-16) and decent dividend yield of ~3.8%.
Jodie Foo
OCBC Investment
|
http://www.ocbcresearch.com/
2016-11-22
OCBC Investment
SGX Stock
Analyst Report
1.150
Same
1.150
