SHENG SIONG GROUP LTD (OV8) – Updates 4 Nov

 

Share Price when postedShort Term ViewLong Term ViewCurrent Share Price
0.99FA dependent on China
TA Bullish biased
FA & TA BullishSGX:OV8: (%)

 

Sheng Siong has released it financial results since my last post on 23rd Jul and we can see that it is favorable and aligned to the earlier analysis:

 

  1. Gross profit margin is maintained at >25%  (25.8% to be exact)
  2. Consistent growth in net profit (Profit before tax 10.7% growth, Profit after tax 25.3% growth)
  3. Growth driver –
    1. Opening of Tampines supermarket (full impact to be seen in Q4)
    2. Opening of supermarket in China (expected to be Nov/Dec)
    3. Tie up with bank of china for a 12% credit card rebate (this is the highest in Singapore!)

 

The supermarket in China is located in Kunming with a space of around 40k sq ft. As China has becoming very tech savvy, learning and knowledge from the new opening this store could potentially be transferred back to existing supermarkets which we see it as a good potential.

It would be seen as bonus growth engine for Sheng Siong should the supermarket in China perform well.

 

Potential competition:

Amazon – this could potentially become a threat if supermarket don’t innovate fast enough. However, as of now, the cost to include delivery is still more expensive than buying off the shelf (i.e. regular discounts, flexibility to choose the product with latest expiry etc)

 

Immediate solution which Sheng Siong has implemented is to shift the product mix to have more fresh produce (slightly more difficult to replace with Online/delivery)

 

Technical analysis of Sheng Siong:

  1. Break out seen at 0.93 with large volume
  2. Immediate price action of 0.99 could be seen to back test resistance
  3. Momentum is strong for this stock