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Sheng Siong

mrwise
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17-Mar-2015 11:40

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Break $0.77...going higher high!!!

Reachin $0.8

Cheers!

nea03177 ( Date: 16-Mar-2015 13:11) Posted:

0.77 hard to crack. Hope it break through and go towards 80 cents. Congrats on yr winnings.

mrwise ( Date: 16-Mar-2015 12:50) Posted:

Strong up buying! More to come!

Have been buying since $0.65..

Gd dividend stock as well!

Look out for more

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nea03177
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16-Mar-2015 13:11

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0.77 hard to crack. Hope it break through and go towards 80 cents. Congrats on yr winnings.

mrwise ( Date: 16-Mar-2015 12:50) Posted:

Strong up buying! More to come!

Have been buying since $0.65..

Gd dividend stock as well!

Look out for more!

nea03177 ( Date: 26-Feb-2015 12:30) Posted:

Local research houses call buy but foreign brokerages collecting at 0.735&0.74.

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mrwise
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16-Mar-2015 12:50

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Strong up buying! More to come!

Have been buying since $0.65..

Gd dividend stock as well!

Look out for more!

nea03177 ( Date: 26-Feb-2015 12:30) Posted:

Local research houses call buy but foreign brokerages collecting at 0.735&0.74.

mrwise ( Date: 23-Jan-2015 14:50) Posted:

Watch this!!!

Moving up!! More to come...

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nea03177
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26-Feb-2015 12:30

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Local research houses call buy but foreign brokerages collecting at 0.735&0.74.

mrwise ( Date: 23-Jan-2015 14:50) Posted:

Watch this!!!

Moving up!! More to come...

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mrwise
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23-Jan-2015 14:50

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Watch this!!!

Moving up!! More to come...

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yohowslife
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13-Jan-2015 01:43

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current pe of 22 based on annualised 2014 earnings seems relatively high unless company can continue to deliver on its growth story. any profits from new expansion plans will probably only be reflected in 2016 financial statements once the new stores become profitable. full article below.

http://www.investark.com/Analysis13shengsiong3q14.html

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Cool123
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09-Sep-2014 11:52

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Well said. Me fully loaded now.

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wangerism
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09-Sep-2014 11:47

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load it if u believe u r right....then unload when others start to realise its value...lol

Cool123 ( Date: 09-Sep-2014 11:37) Posted:

Great expansion plan but was misunderstood by investors. Please wake up.

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Cool123
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09-Sep-2014 11:37

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Great expansion plan but was misunderstood by investors. Please wake up.

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chinastar
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07-Sep-2014 09:45

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green light to go:)

yingli ( Date: 05-Sep-2014 00:14) Posted:

Haha Bro Qanghoo,

What I meant was if those capital weren' t used in China JV, it could have been used to fund future expansion in Singapore instead of having to raise new fund.

But I guess your interpretation of counter asset light trend works also.

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yingli
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05-Sep-2014 00:14

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Qanghoo
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04-Sep-2014 23:14

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According to SS' announcement (extracted in blue below), the placement is to finance the group' s future expansion plans in Singapore, which include the acquisition of properties for new retail outlets. With many companies taking strategic decisions to go asset-light, the strategic mistake for SS may be trying to be the contrarian by purchasing its own premises required for operations.

The Placement will allow the Company to raise gross proceeds of approximately

S$80,400,000. Subject to relevant laws and regulations, the Group intends to use the gross

proceeds as follows:

(a) 98% to 99% of the gross proceeds will be used to finance the future expansion plans of

the Group in Singapore and

(b) 1% to 2% of the gross proceeds will be used to pay the estimated fees and expenses,

including professional fees and expenses, incurred or to be incurred by the Group in

connection with the Placement.

yingli ( Date: 04-Sep-2014 22:23) Posted:

Nothing wrong with placement which is only to support SS' s China' s ambition.

The decision to expand into China will prove to be a fatal one.

SS is competing as cost leader in Singapore and has yet to gain an upper hand against its main rival, NTUC. If the investment in China failed, it would incur huge cost for SS and possibly affect SS competitive position in the home market. A very risky move indeed.

With a fragmented market served mainly by family owned provision shops, Malaysia seems to be a better choice for SS.

ash902 ( Date: 04-Sep-2014 22:14) Posted:

why is placement a wrong move?

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yingli
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04-Sep-2014 22:39

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his is not the first time SS made such strategic mistake.

The following extract is quoted from an analysis I posted on ShareJunction, one year ago (02 Aug 2013). It explains why SS made bad decisions and shareholders can expect SS to continue making more strategic mistake in the futue.

" Change In Management (I might be wrong about this point): Members of the management team in SS are mostly made up of the founding father' s family members. This gave rise to some kind of nepotism where the decision makers might not be the best and most capable. At least, the founding father, Lim Hock Chee remain to occupy the most powerful and important position in the firm. One need to understand that the founding father not necessary has the skills and experience require to manage the now much larger and complex company, and take it to greater height. This is true for many startups, though painful, it is a delimma between CASH AND KING Thus for SS, the resulting poor management decision making can be seen from cases such as buying 5 wet markets that can' t be converted into supermarket, and the poor strategic decision to operate 24hours. It is advisable that SS start bringing in professional managers to its top management office. Otherwise more costly problems would be expected to set in as the business grow more complicated and goes outside the expertise of the current management."

Rosesyrup
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Posted: 02-Aug-2013 02:42

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The Cost Leader Who Forgets About His Cost

The reason that Sheng Shiong (SS) has such large scale of operation right now is that it managed to find and exploit the gap between NTUC and One-Dollar shops. Throughout the years, SS had been mindful of its cost and was able to transfer the cost saving to its customers. The cost saving capability thus becomes SS' s competitive advantage that enable it to rout stronger competitors like Shop N Save. However, in recent SS appeared to have lost sight of the engine it depends on to propell its growth. In this report, I will attempt to explain what SS should not have and should have done, which might threaten its fundmental.

Should Not Have Done

24 Hours Operation: In the bid to remain " competitive" , SS followed NTUC' s strategy of operating 24hours stores. However, this would prove to be a deadly mistake. With the little passenger traffic, low products' contribution margin, high overhead cost (due to SS large store front) and high labor cost (SS is a labor intensive firm), the cost of operating in the night can hardly justify the revenue. The only reason why 7 Eleven could run such 24 hours operation is due to its much smaller store, high contribution margin (The same products cost a lot more in 7 Eleven), and low labor cost (store manned by one staff). Moving back to SS, the losses from night operation has got much deeper implication. The huge losses from serving small amount of customers in the night will now be transferred to the majority of customers who do not make use of the night service through higher product prices. This reduced SS' s competitiveness. SS would be better off by giving NTUC the night market which is loss making.
E-Grocery: E-Grocery has been pretty successful in large countries like US where population is scatter across the land. The story is quite different for Singapore which has uniquely small landscape and numerous high rise flats, nearly every family has access to a supermarket which is just a stone throw away from their block. This makes E-Grocery hardly necessary. Furthermore, the higher products' price in E-Grocery is targeted at a higher end customers who are very different from SS' s current penny pinching customers.
However, do note that I am not trying to imply that SS should not go into E-Grocery at all. It is just that the time isn' t ripe. SS could have better invest its capital on fine tuning many parts of its operation- which will be discussed in the SHOULD HAVE DONE part. The result of fine tuning would have increase SS efficient and enable it to better compete with the first movers-e.g. red marts. Simply put, the strategy is to let NTUC engage in a costly competition with the first movers first, meanwhile SS focus on improving its physical distribution and go in later. Afterall, the first mover has the advantage of doing away their overhead cost.
Mandai Link Distribution Centre: SS invested 65millions in this warehouse will lead to higher fixed cost and higher break even point. SS could have first rent a warehouse while continue to explore the option of cross-docking. This will remove the need of purchase expensive property on Singapore scarced land, and reduce its manpower which is another expensive resources in Singapore.

Should Have Done

If you are thinking about Walmart now, you are right. The history of Walmart provide many important learning points and guidelines for SS in its quest toward dominance of Singapore market.

Invest In Better IT System: SS lack of good IT support is especially evident in its outlet stockpile. It is not rare to: pick up expired products, hear employees complaining about overordering goods that are not selling and not ordering goods that are lacking. Just look up ontop of SS' s shelves, the large number of boxes stacked on the shelves are the amount of goods that the employees overordered. All these point to the fact that SS is lacking an IT system that keep track of its goods and is therefore unable to make informed decision. A good item system that is able predict demand and make informed ordering should help SS to reduce unnecessary inventory level (wastage), and free up space in the store which will replace the need of a warehouse.
Setting Up Self Service Cashiers: These would reduce SS reliance on its massive manpower. Currently, much of the staff in SS stores are Malaysian workers.This is expected to increasing eat into SS profit as government continues to increase foreign levy. Just a little sidetrack, if you ever see a SS' s staff standing infront of the store exit, he is not ideling- he is there to make sure there is no shoplifting going on. Assuming that the pay of that SS staff is $7 per hour, it would only make sense if SS starts losing a 5kg pack of rice (worth around $7) to shoplifting per hour. During peak hours, you can ever see more than one of these " security guards" . Reliance on security camera would make much more economic sense. Anyway, instead of reining in its staff cost, SS is still continuing its aggressive employment policy- overstaffing is what might follow.
Change In Management (I might be wrong about this point): Members of the management team in SS are mostly made up of the founding father' s family members. This gave rise to some kind of nepotism where the decision makers might not be the best and most capable. At least, the founding father, Lim Hock Chee remain to occupy the most powerful and important position in the firm. One need to understand that the founding father not necessary has the skills and experience require to manage the now much larger and complex company, and take it to greater height. This is true for many startups, though painful, it is a delimma between CASH AND KING Thus for SS, the resulting poor management decision making can be seen from cases such as buying 5 wet markets that can' t be converted into supermarket, and the poor strategic decision to operate 24hours. It is advisable that SS start bringing in professional managers to its top management office. Otherwise more costly problems would be expected to set in as the business grow more complicated and goes outside the expertise of the current management.

In a nutshell, instead of engaging in costly battle for new markets, SS should focus on streamlining it current distribution network and aim to replace NTUC as Singapore top retailer. However, should SS continue its current stratgey that stray away from its original customer group, it will soon loses it competitive advantage. The resulting sign of SS failing would then be expected to surface in 2 years time, when economy growth is strong and consumers are turning away from basic products sold by SS.

Based on the above forecast and the expectation that management would not made much changes from its current strategy, I have assigned SS a TP of 58cents.

Just sharing my view here, email me [email protected] if you have something to share with me. Thanks.

Author: Rosesyrup

Disclaimer:

The following analysis is purely my personal opinion. I urge you to do your own assessment and calculation for any relevant decision making purposes.
The analysis is based purely on consideration of the company' s financial and economic interest.

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yingli
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04-Sep-2014 22:25

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Read Motley Fool Article: http://www.fool.sg/2014/09/04/why-has-sheng-siong-group-ltd-fallen-by-5-6-today/

I think Motley Fool is quite good in articulating SS' s strategic mistake.

Any, I don' t have any position on this one. I just speaking from business strategy point of view.

yingli ( Date: 04-Sep-2014 22:23) Posted:

ash902 ( Date: 04-Sep-2014 22:14) Posted:

why is placement a wrong move?

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yingli
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04-Sep-2014 22:23

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ash902 ( Date: 04-Sep-2014 22:14) Posted:

why is placement a wrong move?

yingli ( Date: 04-Sep-2014 18:21) Posted:

In the world of business, there is no lack of example where initially highly successful coporation made one wrong move, and whole game is gone (一着不慎，满盘皆输 )

Watch Sheng Siong burn 燃烧吧火鸟

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ash902
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04-Sep-2014 22:14

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why is placement a wrong move?

yingli ( Date: 04-Sep-2014 18:21) Posted:

In the world of business, there is no lack of example where initially highly successful coporation made one wrong move, and whole game is gone (一着不慎，满盘皆输 )

Watch Sheng Siong burn 燃烧吧火鸟

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Cool123
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04-Sep-2014 21:55

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My deal with AH Lim will not be a back fire but the future is sparking bright.

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tanlp13
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04-Sep-2014 20:57

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Top volume trading today... believe will not drop below $0.67. Otherwise, no ppl subscribe new share

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yingli
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04-Sep-2014 18:21

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In the world of business, there is no lack of example where initially highly successful coporation made one wrong move, and whole game is gone (一着不慎，满盘皆输 )

Watch Sheng Siong burn 燃烧吧火鸟

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RogerT28
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04-Sep-2014 18:04

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Sheng Siong

Sheng Siong caters to the mass market segment, with stores located mainly in HDB estates.

Total outlets = 33

Total retail area = 400 000 sq ft

Total no of shares = 1 503 537 000

Major shareholders (before placement of 120 000 000 shares):-

SS Holdings - 32.4%
Lim Hock Chee - 12.3%
Lim Hock Eng 12.3%

Free float 30.6%

Latest quarterly financial report (2Q2014)

Revenue - $171.6 mil

Net profit - $11.075 mil (30.3% increase over corresponding period the year before)

Earnings per share (full year) &ndash 2.59 cents

Present:

Defensive counter with 4% dividend yield.
Sheng Siong has distributed 90% of profits as dividends since listing.
Not only is Sheng Siong debt-free, it has cash holdings of $95.6 million (as of 30 Jun 2014).
Sheng Siong is in the recession-proof business. More are likely to buy groceries than to dine-out during a recession.
ne of Warren Buffett' s major investments is Walmart, USA biggest supermarket.
Low rental expenses with mainly HDB and JTC leases versus competitors&rsquo rental expenses at shopping malls and commercial properties.
Sheng Siong distribution centre at Mandai &ndash enjoy economies of scale savings.
Present share price valuation is much lower than that of competitor Dairy Farm.
Sheng Siong has taken market share away from its competitors (2Q2014 financial report).

Future:

More housebrands being introduced.
More 24-hour outlets.
Any new outlet open will be a major earnings catalyst.
New online portal will contribute to more profits.
More retail space in future

&ndash bought 19 000 square feet of retail space in Yishun (cost $55 million, with $6.1 million paid) and 36 000 square feet of retail space in Tampines

Started a joint venture (60% share) to enter China market

Target prices by houses:

83 cents (OSK DMG) &ndash 25.08.2014

76 cents (OCBC) &ndash 25.07.2014

85 cents (DBS) &ndash 25.07.2014

79 cents (CIMB) &ndash 24.07.2014

82 cents (JP Morgan) - 2014

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Watch Sheng Siong burn 燃 烧 吧 火 鸟

Watch Sheng Siong burn 燃 烧 吧 火 鸟

Watch Sheng Siong burn 燃 烧 吧 火 鸟

Watch Sheng Siong burn 燃烧吧火鸟

Watch Sheng Siong burn 燃烧吧火鸟

Watch Sheng Siong burn 燃烧吧火鸟