Sheng Siong

Sheng Siong Results: Announced 1Q12 results which were slightly below expectations after striping out one-off gains. Rev at $159.8m, +4% yoy and +15% qoq, while net profit at $16.8m, +73.7% yoy and +99.6% qoq. Gross margins fell slightly to 20.8% vs 22.9% yoy. Strong bottom-line was largely boosted by a one off gains, which saw other income rose 1218% to $11.2m. Increase in rev was due to higher comparable same store sales, which improved by 2%, while new outlets at Woodlands Ind Park and Thomson which opened in Nov11 have also contributed to the growth in 1Q12 rev. However Stripping out exceptional gains, 1Q12’s net profit would have been $8.0m lower than 1Q11 net profit of $9.7m, mainly attributed to lower gross margins and the lower contribution from Woodlands Industrial Park and Thomson outlets compared to the Katong outlet. Going forward, grp is optimistic on prospects, noting that Grp has signed leases for two new outlets totalling 19,000sqft. With the opening of these outlets in 2Q to 3Q12, Grp’s total retail area is expected to expand by about 5.5%. Caution however that current uncertainties in the global economy, high oil prices and threat of inflation might impact on its margins if it cannot pass the increase in cost to its customers. Overall fundamentals remain strong, with grp in a net-cash position. DBSV maintains Hold with $0.47 TP. CIMB neutral with $0.49 TP OCBC maintain Hold with $0.49 TP