Sheng Siong Group‟s (SSG) FY14 results largely met the street‟s expectations. FY14 revenue rose 5.6% to S$726.0m, driven by new stores growth of 2.3%, longer operating hours, marketing initiatives and refurbishment of old stores. Notable improvement in gross profit margin from 23% to 24.2% on the back of lower input costs, better sales mix and stable selling prices, translated to good growth for the group‟s bottomline. FY14 net profit had increased 22.3% to S$47.6m, coming in marginally higher than our forecast.

With regards to the joint venture agreement with LuChen Group to operate supermarkets in Kunming, China, operations will not commence until 2H15. Management stated that while this project is likely to be unprofitable, the financial impact is „not expected to be significant‟. Pending further information at the analyst briefing later this morning, we will incorporate the information into our estimates for FY15. Meantime, do note that our rating for the stock is a BUY and our pre-results fair value estimate is S$0.77 and we will also review this post briefing.

Source: OCBC Research - 26 Feb 2015