Sheng Siong Group

[vesfreq]

CF,

I tend to agree with the analyst. Another potential catalyst for the higher fair value may be the opening of the migration "flood gates" after elections. Its a sensitive topic. I was talking to a friend and it seems quite likely that government has to lift the lid somewhat on import of foreign workers.

Today's ST reported that construction faced cost pressure and labour shortage, which then caused some of the construction firms to wind up. It is worrying if labour supply continues to be restricted in certain industries, especially construction. Limited supply of labour will eventually drive up construction costs and not forgetting giving upward price pressure on property. Its a delicate balance, especially with the elections looming in the near term.

With greater foreign worker numbers, SSG is well positioned to leverage on the higher consumption rates.

I think Giant operates in rather different locales, so quite hard to compare SSG and Giant side by side. Where SSG is located, its hard to find a Giant nearby. SSG is primarily located in the major heartlands.

SSG will benefit also (to some extent) from the depreciating ringgit, especially for those imports from M'sia. The Q3 results look quite likely to enjoy some improvements. With 5 outlets that started since last FY to now, activity levels should be picking up to speed Q3 and also Q4 this year.

Have fun investing.

[CityFarmer]

I have updated my Sheng Siong write-up, based on the latest 1H2015 result.

The write-up has been upgraded with the new valuation methodology. All comments are welcomed.

Thanks

[vesfreq]

Thanks CF,

That was an informative piece. SSG enjoying a good recovery, after ex dividend. A colleague added this and I think its a good point. He said that SSG is generally immune to global economics. That gives its performance very strong resilience to issues occurring in other parts of the world. This kind of certainty is an uncommon one, given that many businesses in singapore are generally well exposed to global economics and issues.

It appears that ringgit will continue to be weak with the 1mdb saga. There should be some extent of financial benefit on the cost of sales.

[spinfire]

I have updated my Sheng Siong write-up, based on the latest 1H2015 result.

The write-up has been upgraded with the new valuation methodology. All comments are welcomed.

Thanks

Thanks for the report, it was a very good read.

I look forward to see how it's China operations perform. If I'm not wrong, it's first Kunming store should be starting operations soon. The year-end results should give a glimpse of its performance.

Given Singapore's small domestic market, the China operations will be crucial in determining whether Sheng Siong net profits can continue to grow at 15-20% annually.

I also wonder why doesn't the management reduce dividend payout ratio to retain cash for expansion. This reduces the need for capital raising in the future.

[CityFarmer]

Thanks CF,

That was an informative piece. SSG enjoying a good recovery, after ex dividend. A colleague added this and I think its a good point. He said that SSG is generally immune to global economics. That gives its performance very strong resilience to issues occurring in other parts of the world. This kind of certainty is an uncommon one, given that many businesses in singapore are generally well exposed to global economics and issues.

It appears that ringgit will continue to be weak with the 1mdb saga. There should be some extent of financial benefit on the cost of sales.

Yes, both MYR, and INR help to drive the cost down thus the margin

The best is the cost saving due to processes efficiency, which is sustainable, IMO

[vesfreq]

I have updated my Sheng Siong write-up, based on the latest 1H2015 result.

The write-up has been upgraded with the new valuation methodology. All comments are welcomed.

Thanks

Thanks for the report, it was a very good read.

I look forward to see how it's China operations perform. If I'm not wrong, it's first Kunming store should be starting operations soon. The year-end results should give a glimpse of its performance.

Given Singapore's small domestic market, the China operations will be crucial in determining whether Sheng Siong net profits can continue to grow at 15-20% annually.

I also wonder why doesn't the management reduce dividend payout ratio to retain cash for expansion. This reduces the need for capital raising in the future.

Not sure if I read correctly. I seem to have read about mr lim mentioning about reduction in dividend payout so that they can tap on more capital for expansion.

China seems so attractive that dairy farm joining the fray too

[CityFarmer]

I also wonder why doesn't the management reduce dividend payout ratio to retain cash for expansion. This reduces the need for capital raising in the future.

The recent placement, served more than just capital raising, based on the feedback from management during recent AGM. The placement has broaden the shareholder base with more international institutional investors.

To illustrate with few numbers.

Pre-placement: Free Float ~28%, shareholders with 1 mil share and above is 29 (includes the Lim brothers)

Post-placement: Free Flaot ~34%, shareholders with 1 mil share and above is 34 (includes the Lim brothers)

(vested)

[vesfreq]

I also wonder why doesn't the management reduce dividend payout ratio to retain cash for expansion. This reduces the need for capital raising in the future.

The recent placement, served more than just capital raising, based on the feedback from management during recent AGM. The placement has broaden the shareholder base with more international institutional investors.

To illustrate with few numbers.

Pre-placement: Free Float ~28%, shareholders with 1 mil share and above is 29 (includes the Lim brothers)

Post-placement: Free Flaot ~34%, shareholders with 1 mil share and above is 34 (includes the Lim brothers)

(vested)

Would be interesting to know who is the additional 5 shareholders holding 1 m and above.

At the same time, RM fell to new lows. Based on Oanda's chart, aug 2014 exchange rate was 2.532, while the exchange rate today is 2.855. Thats a mighty difference of 0.323. RM (against SGD) has depreciated by approximately 12%.

This essentially brings down SSG's cost of sales for this month by 12%. If we discount the rate of savings in the cost of sales (say 80% x 12%), that still gives SSG easily 10% savings on their malaysian imported produce.

Assuming constant selling prices, the gross margin has a potential upside of 10%, for those goods imported from Malaysia. The grown in Msia fresh veggies and fruits will likely enjoy the wider margins. If SSG were to pass this back to consumers as savings, also quite a bit of buffer to play with.

Just realised that I should also update the Indonesian currency depreciation as well. Over the 1 year period. Aug 2014 to Aug 2015 this year, the IDR has depreciated by about 4%. Imports from Indonesia also is generally cheaper. It seems imports from M'sia are more significant compared to Indonesia.

Congrats to all who are still vested.

Moi still vested. Reallocated more capital into SSG. Interestingly, this morning also a lot of buyers incoming.

[CityFarmer]

RedMart is expanding fast. It has several rounds of funding already. I reckon it is still burning cash...

Singapore online retailer RedMart raises US$26.7 mil from investors

SINGAPORE (Aug 21): Singapore-based online retailer RedMart has raised US$26.7 million ($37.5 million) in funding from investors, including Garena, Facebook co-founder Eduardo Saverin and SoftBank Ventures Korea.

It also named Colin Bryar, previously a vice-president at Amazon, as chief operating officer. Bryar had held several retail and technology leadership roles in Amazon and served for two years as technical adviser to Amazon founder Jeff Bezos.

RedMart, which was launched in October 2011, will raise more funds later this year to expand the grocery and marketplace business, launch its On Demand Marketplace and invest in new products, the company says.
http://www.theedgemarkets.com/sg/article...-investors

[Xiaosaint]

The great stocks market panic from the China market scare has strike again! SSG dropped 4.5 cents today to $0.805!!! Correct me if I'm wrong, but I think investors are overly sold this stock... SSG barely has any exposure in China... Even if we take into account the joint venture that SSG recently went into, the US$6 mil equates to only ~S$0.0056 per share. (I'm usin the US$-S$ exchange rate today divided by the no. Of existing shares issued)

I hope the panic continues! Then I can grab some more at even lower prices! Woots!!!


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