Sheng Siong Group - OCBC Investment 2020-08-03: A Strong Quarter; Declares Higher DPS

SHENG SIONG GROUP LTD (SGX:OV8) | SGinvestors.io SHENG SIONG GROUP LTD (SGX:OV8)

Sheng Siong Group - A Strong Quarter; Declares Higher DPS

  • Strong 2Q due to elevated demand.
  • Record high gross margin of 28.1%.
  • Higher interim DPS of 3.5 cents.



2Q20 results beat estimates

  • Sheng Siong Group (SGX:OV8)’s 2Q20 result was above our estimates due to stronger-than-expected sales. 2Q20 revenue rose 75.8% y-o-y to S$418.7m, while PATMI surged 150.4% y-o-y to S$46.1m, mainly attributable to elevated demand during the Circuit Breaker period as consumers loaded up on goods and products.
  • Similar to the trend seen in 1Q20, same store sales were the key revenue driver this quarter. Of the 75.8% increase in revenue, 61.2 ppt was contributed by comparable same store sales and 13.3 ppt by new stores, with the remaining 1.3 ppt from the stores in China.
  • Gross profit margin increased to 28.1% (0.7 ppt up y-o-y), largely due to lesser promotions backed by strong demand, improved sales mix with a higher proportion of fresh items and stable input prices.
  • An interim dividend of 3.5 S cents per share was declared, as compared to 1.75 S cents per share in 2Q19.


Sheng Siong to open 3 more stores, bringing total to 64 in Singapore

  • We understand from management that the Housing & Development Board (HDB) has not released any new spaces for bidding since Circuit Breaker as the bidding process was impacted by COVID-19. As at 30 Jun 2020, Sheng Siong has 61 stores in Singapore and 2 stores in China.
  • Sheng Siong opened 2 new stores in 1H 2020 and is expected to open 3 new stores in 2H 2020 in Singapore. With these additional stores, Sheng Siong’s total store count will increase to 66 (64 in Singapore and 2 in China).


Demand could moderate in 2H from 2Q’s level






Chu Peng OCBC Investment Research | https://www.iocbc.com/ 2020-08-03
SGX Stock Analyst Report BUY MAINTAIN BUY 1.85 UP 1.640



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