Sheng Siong Group Ltd.: Strategic Expansion and Growth Potential Drive ‘Buy’ Rating
Paul Chew has assigned a Buy rating to Sheng Siong Group Ltd., citing its strategic expansion and growth potential. The company has expanded its store footprint by 13% year-over-year, with plans for further growth. Same-store sales have increased due to government vouchers and promotions, despite margin pressures. The new Sungei Kadut distribution center is expected to improve efficiency. DBS also maintains a Buy rating with a S$2.60 price target, reflecting positive growth prospects.
Paul Chew has given his Buy rating due to a combination of factors that highlight Sheng Siong Group Ltd.’s growth potential and strategic expansion. The company has significantly increased its store footprint by 13% year-over-year, adding 11 new stores, with plans to open two more by the end of the year. This expansion is expected to drive revenue growth into the next fiscal year, with a projected 11% increase in store space.
Additionally, same-store sales have shown a notable increase, attributed to government vouchers and successful promotional activities, which have boosted consumer spending. Despite pressures on net margins from rising staff costs and lower finance income, the long-term outlook remains positive. The upcoming Sungei Kadut distribution center is anticipated to enhance operational efficiency and support future growth. Consequently, the target price has been adjusted upward, reflecting these growth prospects.
In another report released on October 31, DBS also maintained a Buy rating on the stock with a S$2.60 price target.
