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06-10-2023, 06:57 PM
Personally, I find Sheng Siong as a good subsitute to CPF OA. It gives 4% and is in a defensive sector.
A beneficary of Singapore immigration policy which has been brining in a percentage of low wage workers, Sheng Siong positions itself on the low-price spectrum on supermarket branding, thus avoiding Fairprice Finest or Jason (part of Dairy Farm Group). As a demand derived business, with each growth in population, a higher level of demand results for Sheng Siong's supermarket.
In addition, like most supermarkets, the cash conversion cycle of Sheng Siong is low (it has a negative cash conversion cycle). This shows the business model does not need a lot of money to operate and Sheng Siong itself is lowly geared with virtually no debt. Hence it has a 70% payout ratio which is sustainable.
Sheng Siong is a good stock to own under the CPF Investment Scheme where individuals can use their CPF OA money to buy stocks. A 4% dividend company like Sheng Siong is definitely better than keeping money in CPF OA.
The tradeoff for the premieum over CPF OA rates is that Sheng Siong business will decline but i beliver investors would be nimble enough should it happen as SS's decline is unlikely to happen overnight
A beneficary of Singapore immigration policy which has been brining in a percentage of low wage workers, Sheng Siong positions itself on the low-price spectrum on supermarket branding, thus avoiding Fairprice Finest or Jason (part of Dairy Farm Group). As a demand derived business, with each growth in population, a higher level of demand results for Sheng Siong's supermarket.
In addition, like most supermarkets, the cash conversion cycle of Sheng Siong is low (it has a negative cash conversion cycle). This shows the business model does not need a lot of money to operate and Sheng Siong itself is lowly geared with virtually no debt. Hence it has a 70% payout ratio which is sustainable.
Sheng Siong is a good stock to own under the CPF Investment Scheme where individuals can use their CPF OA money to buy stocks. A 4% dividend company like Sheng Siong is definitely better than keeping money in CPF OA.
The tradeoff for the premieum over CPF OA rates is that Sheng Siong business will decline but i beliver investors would be nimble enough should it happen as SS's decline is unlikely to happen overnight