Sheng Siong Group (SSG) posted a solid set of 1Q19 results which were within expectations. Revenue increased 10.1% to S$251.4m due to the opening of ten new stores, offset by a 1% decline in comparable same store sales (CSSS) which was in turn due to softer consumer sentiment and new stores opening nearby some of the existing stores. We see the 1% CSSS decline in 1Q19 as an improvement over the 2.7% decline seen in 4Q18.

Gross profit increased 9.6% YoY to S$65.5m. PATMI increased 5.9% YoY to S$19.4m or 25.1% of our full-year forecast.

Sheng Siong has secured leases for three new HDB stores which should be operational by the end of May. We maintain BUY on SSG but place our fair value of S$1.19 under review pending further details.

Source: OCBC Research - 29 Apr 2019