Sheng Siong Group

[vesfreq]

Fellow VBs,

I find that somehow the market didn't seem to ve priced in the eventual population growth target of 6.9m. If assuming current population of 5.5m, 6.9m gives another 25.4 percent more consumers shopping for groceries. I believe there was like some news lurking about this 6.9 m population target.

Assuming that not all 25.4 percent shop at SSG, there is plenty more consumers who are potential SSG shoppers. If we are to assume a rough increase of 15% in terms of number of shoppers at SSG, thats 108,898k sgd (2014 revenue 725,987k x 15%), thats a fair amount of revenue. The current positioning of the ssg stores gives ssg a good strategic "stranglehold" of the grocery market.

My guesstimate gives me a possible eps of 5.97 cents, assuming that most operating costs remain relatively constant. If pe is at 22 times. That gives a possible price of $1.31. Then again, its my guesstimate.

With the ringit exchange rate on down trend, there is even more room for margin widening. Recent exchange rates are quite attractive. I have gotten 2.69 at some money changers. This results in lower cost of sales for those goods imported from m'sia. Singapore currency has generally been quite well maintained. MAS relaxed monetary policy also resulted in stronger sgd http://www.straitstimes.com/news/busines...y-20150414

With m'sia implementation of gst of 6%, there is greater risk of higher cost being translated to higher cost of sales.

My primary concern would be how the china jv would pan out. The financial impact may not be felt for this year at least.

Any comments from fellow vb?

PS: It seems like a strong recession resistant counter. Good times or bad, eat still must eat. We can choose to wear simpler with lesser pay, but eat also can eat lesser. Medical and dental businesses are sure beneficiaries of any population growth.