Sheng Siong

Sheng Siong: 3Q12 results at the upper end of estimates. Rev at $169.7m, +16% yoy and +15.5% qoq, while net profit at $9.8m, +48.1% yoy and +40% qoq. Gross margins flat at 23% yoy. Strong rev was on back of new stores openings and higher comparable same store sales. In 2012, Grp opened 6 supermarkets, namely in Toa Payoh, New World Centre, Geylang, Bukit Batok, Bedok North and Yishun Central, boosting the total retail area to approximately 391,000 sq ft. by 3Q12. Comparable same store sales grew 4.3% yoy for 9M12 due to marketing initiatives and improvement of population numbers and profiles in matured housing estates. Consequently, qoq rev/psf grew 8.8% to $434 in 3Q12 Going forward, grp aims to expand its network across SG and nurture growth of the new stores as a priority for the Grp. In 4Q12, 2 new stores located at Ghim Moh (3,500 sqft.) and Clementi (5,300 sq ft.) are slated to begin operation. The stores will boost the Group’s retail area to around 400,000 sq. ft. by the end of 4Q2012, representing a 14.9% yoy in 4Q11. Grp’s fundamentals remain strong, with no borrowings and a net cash position of $107.2m (7.7c/share) At current price, grp trades at 14.6x P/E and an ex cash basis of 12.3x.