Sheng Siong

Sheng Siong: Good set of 4Q12 results which was in-line, after stripping out non-recurring income. Rev at $160.8m, +15.9% yoy and -5% qoq, while net profit at $8.0m, +113% yoy and -18.5% qoq. Result brings FY12 rev to $637.3m, +10.2% and net profit to $41.7m, +52.9% & gross margins was flat at 22.1%. Strong bottom-line was partly attributed to a +359.2% rise in Other Income, on back of the sale of a Marsiling warehouse ($10.5m) Increase in rev was driven from the 11 new stores which were opened in 2011 and 2012. Comparable same store sales in 4Q contracted slightly due to sluggish demand in 4Q, which was consistent with the flattish mom change, for super market retail sales in Oct, Nov and Dec. In addition lower sales were attributed to 1 of the outlets in Bedok and at the Verge, which were affected by building works in the vicinity. Going forward, grp expects the industry to remain competitive and govts restrictions on foreign labour to remain and could hamper expansion plans. In addition, grp expecct rents to increase which could increase operating expenses. In FY13, all 8 new stores which were opened in diff mths in FY12 would have operated for a full calendar yr and will contribute positively to the grp's financial performance. Grp has announced a div of 0.175c/share (2.9% yield) At current price, the grp trades at 20.3x P/E, with a net cash of $120m. Ratings as follow: DMG maintains Buy with $0.66 TP