SINGAPORE (Feb 23): DBS and OCBC are maintaining their “buy” calls on Sheng Siong following the supermarket operator’s release of its latest 4Q results, which brings FY17 earnings to a total of $69.8 million, up 11.4% from $62.7 million in FY16.
See: Sheng Siong's 4Q earnings up 9.3% to $16.8 mil on higher revenue
DBS’ target price of $1.20 remains unchanged and based on a 25 times FY18F P/E, while OCBC has put its fair value on the stock under review pending Sheng Siong’s analyst briefing.
In a Friday report, lead DBS analyst Alfie Yeo says he expects more outlets to drive the group’s growth growing forward, with a pipeline of planned HDB supermarkets in the next six months to remain robust given how 11 supermarket locations have already been earmarked for tender.
He also notes that the group’s China store in Kunming also recently opened in Nov 2017, although contributions are expected to be minimal for now.
“The new store in Kunming, China commenced operation in Nov 17 in a limited manner as a number of the shops in the new shopping mall where the supermarket is situated have yet to open for business,” comments OCBC analyst Eugene Chua in a separate flash note on Friday.
Similar to DBS, Chua notes that Sheng Siong ended FY17 on a steady note – which was in line with both research houses’ expectations.
“Pending an analyst briefing, we maintain ‘buy’ but put our [fair value estimate] under review,” he concludes.
As at 12.18pm, shares in Sheng Siong are trading 0.54% higher at 93 cents, or 4.8 times FY18 book based on DBS estimates.
