Recommendation : HOLD
Fair Value : SGD 1.62
GOOD ENDING TO 2021 .
• Record gross profit margin of 29.4% in 4Q21
• Total dividend of 6.2 S cents per share declared
• Expecting to open 2 new stores in 1H22
Sheng Siong Group’s (SSG) results came in within our expectations. 4Q21 revenue rose 6.5% YoY to SGD340.0m while PATMI increased 1.9% YoY to SGD32.5m. On a full-year basis, revenue fell 1.7% YoY to SGD1.4b while PATMI was down 4.3% YoY to SGD133.1m, mainly due to the high base effect in FY20 on the back of elevated demand. A final dividend of 3.1 S cents per share was declared, taking total dividend for FY21 to 6.2 S cents per share (-4.6% YoY). SSG opened one new store in Singapore and two stores in China in FY21 as tender process and construction of HDB flats were delayed by the Covid-19 pandemic. Management plans to open two new stores in 1H22. Singapore has been taking the lead in Asia’s borders reopening with the expansion of Vaccinated Travel Lanes and its commitment to “living with the endemic strategy”. As borders reopen and domestic safe management measures ease in Singapore, we believe demand for groceries will taper off. After adjustments, we lower our fair value estimate marginally from SGD1.63 to SGD1.62.