On Sept 25, Sheng Siong announced that it had secured a lease from JTC to build a state-of-the-art distribution centre (DC), which when ready, will set the company for longer-term growth as it is designed to support at least 120 stores.
Andy Sim and Chee Zheng Feng from DBS Group Research have reiterated their “buy” call on leading supermarket operator Sheng Siong Group along with a higher target price of $2.60 from $2.30.
“We believe the company deserves a valuation premium at 23.7 times P/E based on estimated normalised long-term ebit margin of 10%,” state the analysts in their Oct 22 note. “Moreover, as one of the highly liquid and well-managed companies, we believe it will be a key beneficial of the Monetary Authority of Singapore’s (MAS) Equity Market Development Programme (EQDP) funding,” they add.
