Sheng Siong

Sheng Siong: CS has an unrated note. Note that Sheng Siong (SS) is the third largest grocery retailer in Singapore, with an estimated 9.3% market share (based on 2011 retail sales of $578.4m), after NTUC FairPrice (28.9% market share) and Dairy Farm (23.5%), according to Euromonitor. Sheng Siong as per management, targets price-conscious consumers, with its strategy of packing more items per aisle and the removal of traditional on-site storage space in its outlets. This helps it generate the highest rev/sq ft of space vs its peers, according to Frost & Sullivan. Mgt has stated that growth should be driven by new store openings, which it targets at 2–3 per year, and it expects margins to rise with a greater contribution from private labels and cost synergies from the scaling up of its centralised Mandai warehousing and distribution centre, which opened a year ago. The consensus (IBES) is forecasting revenues to grow at 12%/7% YoY in FY12/13E resp. and core net profit to fall 10% YoY in FY12 before rising 47% YoY in 13E. Grp trades at 18x FY12/13E P/E on consensus estimates, vs the average of 23x/19x for regional consumer staples.