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Sheng Siong, Kimly among DBS' stock picks as consumers grapple with inflation
SINGAPORE - As consumers adjust their spending priorities in response to rising inflation, investors should focus on stocks in companies that provide consumer staples like Sheng Siong and Kimly, said DBS Bank.
Pent-up demand for travel may help Singapore Airlines (SIA), while the relaxation of Covid-19 curbs may boost select real estate investment trusts (Reits) and hospitality stocks, the bank added.
DBS announced its stock picks along with a consumer survey that showed Singaporeans are taking a cautious approach on spending, and would prioritise groceries, utilities and dining out.
Hence, the bank would prefer supermarket chain operator Sheng Siong, given its positioning in the mass market and heartland exposure in the Republic.
Among the food service plays, DBS also picked coffee shop and foodcourt operator Kimly.
" Grocery companies could enjoy a second wind in their sails with this heightened inflationary environment," DBS analysts Andy Sim and Geraldine Wong said in a June 21 report.
" The availability of house brands, large store network and a wide array of products provide pricing and bargaining power, as well as allowing costs to be passed on," they added.
Even though DBS' survey showed that Singaporeans will opt to cut frequency of overseas travel, the bank said SIA remains one of its favoured reopening stock pick at this juncture given the big rebound in incoming travellers.
" We believe that a sharp rebound in passenger volumes, elevated air fares and cargo yields will drive robust top line growth. Additionally, the airline' s jet fuel hedging and cost-saving initiatives should keep a lid on inflationary pressures," it said.
The bank said that, while respondents of its consumer survey highlighted that travel is one of the discretionary items that could be cut, it sees pent-up demand coupled with a line-up of corporate events and Formula One returning in September this year driving performance in the next two quarters.
That pent-up demand would also help hospitality-focused Ascott Residence Trust, CDL Hospitality Trusts and Far East Hospitality Trust, it said.
Among Reits, DBS would prefer Frasers Centrepoint Trust, CapitaLand Integrated Commercial Trust and Lendlease Global Commercial.
" Reits with exposure to necessity retail spending will continue to benefit on the back of lower price elasticity of demand and higher turnover rents."
RHB expects rising inflation to boost Sheng Siong&rsquo s topline, upgrades to ' buy'
RHB on Tuesday (May 24) upgraded Sheng Siong : OV8 +0.66% to &ldquo buy&rdquo from &ldquo neutral&rdquo as it expects rising inflation to boost the supermarket operator&rsquo s topline as consumer expenditure normalises.
The research team has also raised its target price on the stock to S$1.78 from S$1.51, after lifting its FY2022 estimates on profit after taxation and minority interests by 17 per cent. At S$1.78, Sheng Siong would trade at 19 times RHB&rsquo s estimates for FY2022 earnings.
The new target price represents a potential upside of 16.3 per cent from Sheng Siong&rsquo s trading price of S$1.53 as at 10 am on Tuesday. The counter was up 0.7 per cent or S$0.01 at the time.
RHB analyst Jarick Seet views Sheng Siong as a &ldquo defensive option&rdquo for investors, especially during such volatile market conditions.
Inflation pressures may also outweigh &ldquo euphoria&rdquo related to the economic reopening. As euphoria related to travel and the reopening of F& B and leisure outlets wears off, consumer expenditure levels will likely tone down as people are likely to stay home and have more home-cooked meals, Seet said.
&ldquo Sheng Siong, well-positioned as a value-for-money supermarket chain, will be a key beneficiary of this normalisation,&rdquo he added.
Moreover, Sheng Siong will likely be able to raise prices to pass on costs while preserving margins, as it has done so in the past when prices rose, RHB noted.
&ldquo The increase in the cost per item will lead to a larger net spend per customer. As such, Sheng Siong may maintain its gross processing margin, while widening its net profit margin, looking ahead,&rdquo Seet said.
In contrast, UOB Kay Hian (UOBKH) on Monday downgraded DFI Retail Group to &ldquo hold&rdquo from &ldquo buy&rdquo as it believes the Asian retail giant&rsquo s earnings will remain &ldquo highly subjective&rdquo to unpredictable government policy in the near to medium term.
The research team has also slashed its target price to US$2.87 from US$3.65, representing a potential upside of 4.4 per cent from DFI&rsquo s midday trading price of US$2.75 on Tuesday.
The drop in target price comes as the research team slashed its earnings estimates by 14 to 48 per cent for 2022 to 2024. It noted the biggest impact to be seen in FY2022 as DFI accounts for the Q4 2021 losses from its Yonghui Supermarkets associate.
DFI on May 19 released a bearish Q1 business update, citing a &ldquo high level of uncertainty&rdquo for the remainder of the year. This was likely the result of headwinds from China&rsquo s strict lockdown measures and the inclusion of Yonghui&rsquo s losses in its 2022 numbers.
&ldquo We had expected a turnaround in the company&rsquo s fortunes in 2022, but the imposition of strict lockdowns throughout China has delayed the normalisation of the company&rsquo s fortunes,&rdquo said UOBKH analyst Adrian Loh.
global rout. blue chip stock stands to gain generally
whereru ( Date: 10-May-2022 16:56) Posted:
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Holding up well today despite XD, any news?
Sheng Siong Group?s net profit grew 13.9% yoy to
S$35.2 million for 1Q FY2022
Revenue for 1Q FY2022 grew by 6.0% yoy to S$358.0 million, contributed by
new stores and comparable same store sales
Gross profit increased by 9.8% yoy to S$102.7 million as margin improved to
28.7% due to higher revenue and a change in product sales mix change
Targets to open 3 to 5 stores per year over the next three to five years...
https://links.sgx.com/1.0.0/corporate-announcements/RVTTHG2AIQJJ3IVI/713967_SSG%20-%201Q%20FY%202022%20-%20Media%20Release.pdf
Sheng Siong aims to open 3 to 5 supermarkets annually in the next 3 to 5 years
SINGAPORE - Supermarket operator Sheng Siong is aiming to open three to five stores annually in the next three to five years, the company said in a bourse filing on Wednesday (April 20).
Sheng Siong currently has 65 outlets in Singapore.
Responding to questions from its shareholders ahead of the company' s annual general meeting on April 26, Sheng Siong said it will continue to look out for retail spaces in new and existing public housing estates, particularly in areas where they do not have a presence.
The company said the supply of new Housing Board shops has been affected in the last two years but is expected to improve gradually.
In 2021, Sheng Siong succeeded in securing the leases of three new stores.
New stores have boosted the company' s earnings. Sheng Siong in February said that its revenue for the second half of 2021 rose 6.4 per cent to $688.1 million due to the opening of three new outlets in Singapore in the second half of 2020.
Sheng Siong also plans to expand its footprint in Kunming, China, where it currently has four stores.
" Our business there has continued to be profitable... we will continue to work on nurturing the growth of our supermarket operations, and aim to open more stores in Kunming," said the company in its filing.
The Shanghai lockdown has had no impact on its business unit in China at the moment, said the supermarket operator.
However, the risks of supply chain disruptions resulting from the Covid-19 pandemic, climate and geopolitical events could result in higher input costs, it said.
" At Sheng Siong, we will strengthen our efforts in diversifying our sources of supply, and work closely with our suppliers to minimise these disruptions," it added.
With the subsiding of the domestic Covid-19 situation, together with the further easing of restrictions, Sheng Siong said it expects the elevated demand to taper down as consumers increase their spending on other social activities or international travel.
It also said competition remains keen from other supermarket operators and online marketplaces.
" We will also continue to build on our e-commerce capability to extend our reach to customers in areas where we do not have physical presence," said the company.
But while it saw an increase in demand for its e-commerce delivery service, Sheng Siong said the majority of its customers continue to prefer to make purchases from physical supermarkets, especially for fresh produce.
The company also said it has no plans to pay higher dividends to shareholders. Since financial year 2017, Sheng Siong has distributed about 70 per cent of its net profit after tax as dividends.
" We will continue with the practice unless there is a need for cash for operational reasons or major capital expenditures. The board also felt that we should (have) a ' war chest' ready on hand and preferred to conserve cash rather than gear up when the need arises," it said in the filing.
Sheng Siong H2 net profit rises 4.8% to S$66.9m on boost from new store openings
SUPERMARKET operator Sheng Siong Group saw earnings for the second half of fiscal year 2021 ended December rise 4.8 per cent to S$66.9 million, from S$63.8 million in the corresponding year-ago period.
However, for the full year, net profit was down 4.2 per cent to S$132.8 million from S$138.7 million in FY2020, as revenue fell 1.7 per cent to S$1.4 billion from a " high base" in FY2020 underpinned by elevated demand in H1 that year due to the Covid-19 pandemic.
Comparable same-store sales for the full FY2021 were also down 4.8 per cent year on year, but this was partially offset by a 2.9 per cent increment from the full-year operations of 5 new stores that were opened in FY2020, said the company.
Revenue for H2 was up 6.4 per cent to S$688.1 million. The group attributed this to the opening of 3 new stores in Singapore in H2 FY2020 which collectively constituted 23.9 per cent of the increment. A new store was also opened in August and November each in China, which amounted to 9.7 per cent of the revenue increment.
Cost of sales for H2, meanwhile, was up 3.4 per cent to S$487.3 million.
Following what was termed a " robust financial performance" , Sheng Siong' s board of directors has proposed a final dividend of S$0.031 per share, up slightly from a dividend of S$0.03 per share in the corresponding year-ago period.
This will bring the group' s total cash dividend for FY2021 to S$0.062 per share, down from S$0.065 per share in FY2020.
The dividend, if approved by shareholders at the group' s annual general meeting on Apr 26, will be paid out on May 20.
In its outlook statement, Sheng Siong said the emergence of the Omicron variant continues to impact the Singapore economy, and the resultant uncertainty could affect the company' s business outlook.
Further easing of restrictions in Singapore, coupled with an increasing percentage of the population being vaccinated, may also result in the " elevated demand" to taper down as consumers increase their spending on other social activities or international travel, said the company.
Sheng Siong also noted that there have been increasing supply chain pressures and higher energy prices resulting in higher input costs, although it said there were no major disruptions to the food supply chain in FY2021 due to the pandemic.
The group said it will continue its efforts to diversify supply sources, and work with its suppliers to minimise these disruptions.
Competition in the supermarket industry is also expected to remain keen among the " brick-and-mortar and online players" , said the company, adding that it will continue to look for retail spaces in new and existing estates, particularly in those where the group has no presence. The company said it will also optimise its supply chain to ensure greater efficiency and a favourable sales mix to enhance its gross margins.
Sheng Siong Group reports net profit of
S$133.1 million for FY2021
- Revenue declined marginally by 1.7% to S$1,370 million in FY2021 due to high
base for FY2020 mainly driven by elevated demand arising from COVID-19
- Gross profit increased by 3.0% to S$393.3 million as margin improved to 28.7%
in FY2021 following favorable sales mix
- Proposed final dividend of S$0.031 per share, total dividends of S$0.062 per
share for FY2021...
https://links.sgx.com/1.0.0/corporate-announcements/6B7OM9DBZPBJRFOC/703318_SSG%20-%204Q%202H2021%20-%20Media%20Release.pdf
Any news of the results announcement date? Last yr' s was on 24th Feb.
Last:1.47 --
new variant scare will trigger supermarket sales to surge
gd luck dyodd
new variant scare will trigger supermarket sales to surge
gd luck dyodd
I heard from news that China government is asking their people to stockup foods till chinese new year because they are seeing food supply shortage next year. Sheng Siong earning may increase further as they had 4 shops in China.
Got news? Suddenly rebound?
Broker' s take: Phillip upgrades Sheng Siong to ' buy' ' on record Q3 gross margins
MON, NOV 01, 2021 - 12:19 PM
PHILLIP Securities has upgraded its call on Sheng Siong Group to " buy" from " accumulate" with an unchanged price target of S$1.69, based on a 5-year historical average of 25 times price-to-equity as well as FY2022 earnings projections which remain unchanged.
Phillip' s upgrade comes after Sheng Siong reported record gross margins of 29 per cent for Q3 of 2021, with its latest set of quarterly results beating the research house' s estimates.
Joelton ( Date: 29-Oct-2021 12:42) Posted:
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Higher revenue boosts Q3 net profit for Sheng Siong
SUPERMARKET Sheng Siong' s net profit for the third quarter to September rose 8.3 per cent year on year to S$34.4 million from S$31.8 million on higher revenue and improved sales mix that included products with higher margin.
Revenue, driven by Covid-induced restrictions that fuelled higher demand and contributions from three stores that opened last year, amounted to S$348.1 million, up 6.4 per cent year on year from S$327.3 million.
In financial results filed to the Singapore Exchange on Oct 28, the mainboard-listed supermarket chain operator reported that its earnings per share improved from 2.21 Singapore cents to 2.29 cents for the quarter.
As it expects the government' s Covid restrictions to be relaxed, given the stance on living with the endemic, the supermarket operator said that demand for its goods might taper off.
The company cautioned that input prices are subject to possible disruptions from the global impact of the pandemic, weather or geo-political events. But it said its core competencies will enable it to improve operational efficiency and increase gross margin.
It said that it seeks retail space in Housing Board estates in Singapore to open stores, particularly where it does not have a presence. The company also expanded its geographical footprint in China, where it is due to begin operations in its fourth store by year' s end.
Have some mercies on the poor ah pehs and ah sohs like me lah. Why rob Peter to pay Paul? This is the time to help fellow Singaporeans, not think of making as much profit as possible.
Singaporeans, remember to vote with your feet once JB is open!
Singaporeans, remember to vote with your feet once JB is open!
odebrecht ( Date: 29-Oct-2021 10:16) Posted:
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If they can afford and yet still have strong cash flows to support its business expansion and increase shareholder value, why not?
Beta21177 ( Date: 29-Oct-2021 10:44) Posted:
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up to 13 month Really?
odebrecht ( Date: 29-Oct-2021 10:16) Posted:
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I agree with this, though there are still some things, such as fresh foods, which I still prefer to buy at the supermarket myself. Haven' t had positive experiences with such online buys so far. Online grocery shopping, while convenient, may not be instant and it might makes more sense to just head down to the nearest grocery market to pick up what you need in times of urgency.
investshare ( Date: 29-Oct-2021 09:55) Posted:
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The dividend yield has almost doubled for shareholders during this pandemic. I think it is only fair that Sheng Siong recognises the hard work put by its employees during this difficult period.
Beta21177 ( Date: 29-Oct-2021 09:59) Posted:
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make $$$ pay staff good bonus but not share holders
nott1965 ( Date: 29-Oct-2021 09:39) Posted:
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