ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

Sheng Siong is new to e-commerce. It will take time for it to pick up the nitty gritty of e-commerce.

I agree with specuvestor that the e-commerce interface should be user-friendly. I would add that customer call centre is also important to handle e-commerce queries (such as late deliveries or non-deliveries).

OSK/DMG report on the company, TP $0.69, rating NEUTRAL

1Q13 core net earnings surged 31.3% y-o-y to SGD10.5m, in line with ours
and market expectations. Revenue growth of 12.3% y-o-y was driven by
contributions from new stores while gross margins expanded by 1.7ppt yo-
y to 22.5%, having recovered from competitive price pressures in 1Q12.
While we continue to like the company, valuations appear rich at 25x
FY13F P/E. Maintain NEUTRAL.
1Q13 core earnings in line. Sheng Siong’s 1Q13 net profit sanked 37.6% y-oy
to SGD10.5m. Excluding a SGD10.5m one-off gain from the sale of its old
warehouse and a SGD1.6m tax provision in 1Q12, core earnings actually grew
by a healthy 31.3% to SGD10.5m. The company’s earnings were in line with
ours and market expectations, accounting for 26% of our full-year estimates.
New stores contributed to 14.2% of revenue. Revenue for the quarter rose
12.3% y-o-y to SGD179.4m, driven by new store contributions, which
accounted for 14.2% of overall revenue. However, same-store-sales growth
(SSSG) slowed to 2.0% vs our forecast of 3.0% p.a. for 2013 and 2014.
Early payment of staff bonuses. We note that during the quarter, cash and
cash equivalents rose by a mere SGD2.7m from SGD27m in 1Q12.
Management attributes this to a change in timing for the payment of staff
bonuses. The company has a high cash-generative business model with a
negative cash conversion cycle.
Labour, rents the key challenges. Commenting on the company’s results,
Management expressed concerns over Singapore’s tight labour market in view
of the Government’s clampdown on foreign labour. At our recent roadshow, its
management said out of its 2,600 employees, 1/3 are non-Singaporeans.
Valuation appears rich. Maintain NEUTRAL. While we like Sheng Siong's
highly cash-generative business model and resilient earnings, valuation
currently appears rich at 25x FY13F P/E. Furthermore, in spite of a 90%
dividend payout, yields appear pedestrian at 3.6%.

http://remisiers.org/cms_images/research...atters.pdf

anybody to share why would sheng siong launch into e-commerce ? is it due to competition ?
there is an outlet near my place, business is really good but also witness a stead stream of foreign workers as well.

my mum in law also shop there , told her about e-commerce she said she would go daily to pick up the greens

I just hope they dun go into e-commerce half-heartedly......

You go to Sheng Siong and shop at their stores, pick what you want from their shelves and pay for it at the cashier and lug it home yourselves.

vs

You buys things from them online they have to hire extra delivery guy to drive a truck to send the the groceries to your place. Multiply by several hundred customers a month who do that means cost of hiring goes up to hire more delivery drivers, more trucks they have to buy, more fuel they have to spend, coe, road tax erp think of the cost to them that is involve.

Also consider the computer equipment infrastructure they have to buy and build up to provide the online services or they could outsource and get a company to do it and third parties they have to pay to who help them process debit/credit of online payments either way lots of money have to burn every month.

I seriously doubt they will make any money in e-commerce selling groceries at best break even only. But it is a must these days to offer such services.

I am vested in Sheng Shiong btw but not because of the e-commerce, there's no value in it.

(vested)

Sheng Siong remains a buy at DBS Vickers with target price of 78 cents

Population growth, store expansion, margin improvement and e-commerce will be Sheng Siong’s key growth drivers going forward, says DBS Vickers analyst Alfie Yeo in a DBSVO Clarity email blast.

Sheng Siong plans to expand its store network to 50 as Singapore’s population projected to increase to 6.9 million by 2030. Management believes that it can increase its network intensity further in the northern eastern and central parts of Singapore.

http://www.theedgesingapore.com/the-dail...cents.html

Sheng Siong is in my watch-list...

Sheng Siong’s Q2 net profit grows 20.8% to $8.5 mil

Sheng Siong Group, one of the largest supermarket chains in Singapore, registered a 20.8% year-on-year increase in net profit to $8.5 million for the second quarter ended 30 June 2013 (2Q2013) mainly led by higher revenue and better gross profit margin.

Revenue increased 8.7% yoy to $159.8 million for 2Q2013, largely because of the increased contribution from new stores of $20.1 million. This was partially weighed down by a contraction in comparable same store sales of $7.3 million

http://www.theedgesingapore.com/the-dail...5-mil.html

The restocking team and cashiers at SS is the fastest and best! volume turnover is good!
slowest is GIANT...

yeah I agree
their cashiers are super fast! just love the speed, makes me hate going to any other supermarket haha

but do monitor/watch the prices of their products... some are marked up quite high...
try to buy during discounts..