not vested
Sheng Siong Group: A safe house in uncertain times
Looking ahead, 4Q14 will see contribution from Sheng Siong Group’s new ~4.0k sq ft store in the Penjuru area that recently started operations.
The acquisition of Block 506 Tampines Central 1 will also likely follow through despite a delay, thus we have included the associated capex of S$65m into our assumptions.
Some upside could be seen if management succeeds in opening this store (~9.8k sq ft) before the next Chinese New Year to reap the benefits of higher sales during the festive season.
Store expansion within the next two years will play a significant role to ensure the closure of its ~42k sq ft Woodlands store in 2017 will not adversely affect financial performance.
At this juncture, we expect steady growth albeit at moderated levels and revise our assumptions for revenue growth in FY14F/FY15F to 5.5%/5.2% (previous: 6.5%/6.0%).
Due to a change in analyst coverage, we derive a new FV estimate of S$0.77 (previous: S$0.78) and maintain BUY.
Source: OCBC