Sheng Siong Group’s (SSG) 3Q results were within expectations with core PATMI increasing 1.5% YoY to S$17.7m or 24% of our initial fullyear forecast.

Revenue grew 8.0% YoY to S$227.9m – 10.6 ppt from new stores, 0.2 ppt from comparable same store sales, 1.2 ppt from the China store, offset by -4.0 ppt from the closure of The Verge and Woodlands Block 6A. Gross profit increased 10.7% YoY to S$60.3m.

3Q18 administrative expenses grew more-thanproportionally, up 16.6% YoY, due to the opening of ten new stores in 2017 and 2018. Management notes that consumer sentiment appears to have deteriorated in the last few months and expects competition to remain keen.

We maintain BUY but place our fair value of S$1.25 under review pending further details from the briefing.

Source: OCBC Research - 31 Oct 2018