Sheng Siong Group’s (SSG) FY15 results came in within expectations. FY15 revenue increased 5.3% to ~S$764.4m, meeting 99% of our FY15 estimate. Net profit also grew 19.3% to S$56.8m, making up 103% of our full-year forecast. Our estimate had also incorporated ‘other income’ of ~S$9m.

The group’s new stores contributed 4.6% to its revenue growth, while 0.7% came from old stores. SSG managed to improve its gross profit margin to 24.7% vs. 24.2% due to opportunities to improve input costs. However, noting that old stores comparable same store sales contracted 1.7% in 4Q, the group may earmark some of these for major-refitting.

Looking ahead, the group will likely see some developments in store openings and closures amid a potentially ‘sluggish’ environment. We will have more information at the analyst briefing held later this morning.

Maintain BUY while our fair value estimate of S$0.95 is under review. A higher final DPS of 1.75 S-cents was declared, bringing total DPS to 3.5 S-cents vs. 3.0 S-cents last year.

Source: OCBC Research - 24 Feb 2016