Sheng Siong

Sheng Siong: Good set of results which was in-line. 1Q13 rev at $179.4m, +12.3% yoy and +11.5% qoq, while core net profit at $10.5m, +31% yoy and +31% qoq. Gross margins increased further to 22.5% vs 20.8% yoy as 1Q12 margin was depressed by aggressive competitive pressures which started in 4Q11. Good set of results was led by contribution from new stores of 14.2%, which was off-set by a contraction in comparable same store sales of 2.0%. Contribution from new stores was slightly lower than the 15.9% achieved in 4Q12 as it was affected by the closure of the Teban outlet in March for a major renovation and declining sales in the Bedok Central outlet as the car park in the vicinity was closed to facilitate the construction of a new neighborhood hub. The Teban outlet re-opened in early Apr13, whereas construction work in Bedok Central may continue for the next two yrs. Comparable same store sales were flat, excluding the impact of these two stores. Going forward, the key driver of grp's strategy will be to expand retail presence in SG, particularly in areas where they do not have a presence and to nurture the growth of the new stores. The Group will also seek to enhance same store sales and to continue to extract more value from the operation of its Mandai Distribution Centre. Ratings as follows: CIMB maintains O/P with $0.75 TP