Sheng Siong

Sheng Siong: 3Q15 net profit of $14.5m (+18.7% y/y, 6.6% q/q) brought 9M15 earnings to $42.2m (+17.8%), making up 76% of street's full year forecast.

Revenue grew to $200m (+7.3% y/y, +11.7% q/q), mainly boosted by contribution from five new stores, while same-store-sales (+ 1.1% y/y) was dampened by several factors:

1) Sales contraction at the Woodlands store due to local shoppers crossing over to JB to enjoy the weaker ringgit
2) Lower footfalls at Loyang Point store due to ongoing renovation works in vicinity
3) Drastic fall in the sale of liquor at the Geylang store after imposition of restrictions
4) Lower sales in some of the older stores

Gross margin remained healthy at 24.3% (+0.1ppt y/y), but dipped 0.9ppt sequentially due to seasonal factors.

Meanwhile, bottom line was boosted by higher rental income (+162%) from leasing of excess space, government grants of $0.6m (2Q14: $0.5m), as well as a one-off advertising support from suppliers and business partners ($0.8m).

In the near-term, Sheng Siong is scheduled to open its fifth new store in 2015 at Dawson Road next month, growing its portfolio gfa by ~6.5% this year.

Overall, the street generally likes Sheng Siong's growth potential, mainly from new store additions, as well as its status as the supermarket with the widest margins.

There are 9 Buy, 1 Hold and no Sell ratings on the counter, with an average 12-month TP at $0.98.