Recommendation :  BUY

Fair Value           :  SGD 1.79

Sheng Siong Group’s (SSG) FY20 performance was better than expected, with stronger sales and other income.  FY20 revenue rose 40.6% YoY to SGD1.4b, while PATMI was up 83.1% YoY to SGD138.7m, mainly attributable to elevated demand due to Covid-19.

Demand remained strong in 2H20, supported by workers working from home and consuming more home-cooked meals. A final dividend of 3.0 S cents per share was declared, taking total dividend for FY20 to 6.5 S cents per share (+83% YoY).

Looking ahead, we believe new stores growth will remain SSG’s key growth driver and strategy as Singapore recovers from Covid-19. As Singapore gradually recovers from Covid-19, we expect economic activities to pick up and this could mean a pick-up in dining out. After adjustments, our fair value decreases from SGD1.85 to SGD1.79.

Source: OCBC Research - 26 Feb 2021