Sheng Siong Group - Maybank Kim Eng 2015-10-26: More to come

Sheng Siong Group - Maybank Kim Eng 2015-10-26: More to come SHENG SIONG GROUP LTD OV8.SI 

Sheng Siong Group - More To Come 

  • Post-briefing note. Management is positive on the outlook for HDB offerings. The first supermarket is expected in China during 1H16. 
  • Expect SSSG to improve from current levels because of store make-overs in old HDB areas. 
  • Reiterate BUY with TP of SGD1.07, at 26x FY16E P/E, a 10% premium to peers’ average. 


A catalyst is store openings. 

  • HDB Offerings Expected to Remain Good Next Year Sheng Siong opened six stores since Dec 2014 vs. zero the previous two years. Management is particularly optimistic regarding the outlook for HDB offerings next year and expects to secure more stores. The HDB had planned to complete about 30 HDB commercial sites in 2014-16 to support retailers, but we understand that only eight have been completed so far, suggesting there will be more HDB offerings in 2016. We have only factored in the Tampines 506 and Junction 9 into our model, which translates into an additional 34,180 sf in 2016, but this could be much bigger. 

Growth Driven by New Stores 

  • Management expects growth to be mainly driven by new stores. We expect the six new stores to contribute SG16-25m in FY15-16. 
  • On the other hand, management expects old stores to continue growing at a slower rate of 1-3% because of weak consumer sentiment. It plans to renovate stores located in old HDB areas in order to boost sales. At least one large store will be renovated next year. 
  • In China, it has yet to find an attractive location in Kunming. 
  • We expect the first supermarket to be opened in 1H16. 

Maintain BUY with TP of SGD1.07 

  • We keep our FY15-17 EPS forecasts unchanged. The stock is currently trading at 20.6 FY16E P/E. We maintain BUY with TP of SGD1.09, at 26x FY16E P/E, a 10% premium to peers’ average. 

Truong Thanh Hang Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2015-10-26
Maybank Kim Eng SGX Stock Analyst Report BUY Maintain BUY 1.07 Same 1.07


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