Sheng Siong

Sheng Siong: 2Q12 results which was in-line. Rev at $146.9m, +5.2% yoy and -7.6% qoq and net profit at $7m, -2% yoy and -58.5% QOQ (Note that there was a $10.5m one off gain from sale in 1Q12.) Rev was led by improvements in comparable same store sales and the net increase of 4 stores, namely the opening of Teck Whye, Thomson Imperial Court, Woodlands Industrial Park, Toa Payoh and New World Centre (Jalan Besar) outlets and the closure of Tanjong Katong supermarket. Gross profit margin declined 1 percentage point ppt yoy to 21.9%, due to the carry over effect of the 4QFY11 price war among supermarket operators. Competitive price pressure is less intense, with qoq gross profit margin increasing 1.1 ppt from 20.8% for 1Q12. Going forward, grp will continue to actively look for suitable shop spaces, particularly in housing estates where they do not have a presence. The Group has secured 2 additional outlets in Bukit Batok and Bedok North# of around 4,200 sqft. and 3,100 sqft respectively, and has began operating the first 24-hour outlet in Geylang of around 11,000 sqft in early Jul Add that based on current pipeline of new stores, grp will boost retail area by around 38,000 sqft and will have 30 outlets with a total retail area of approximately 386,000 sq. ft, and these new stores are expected to contribute to top-line. Grp has declared an interim cash dividend of 1c per share and remains committed to distribute up to 90% of FY12 net profit. Ratings as follow: CIMB maintains OutPerform with $0.49 TP. DBSV maintains Hold with $0.47 TP