Intrigued  by  the  outperformance  of  the  Group's  first  24-hour  store  at  Geylang,  we decided to make an expedition to Geylang at 2am. We were surprised to find  the  area  bustling  with  activity  despite  the  hour.  The  store  was  filled  with  shoppers on  the  ground floor (the store spans 11k sf over two floors). We note  several  key  differentiating  factors  from  competitors:  Cold  Storage  and  NTUC  Fairprice. Apart from the blasting of Chinese music, we noted a wider variety of  Chinese cooking ingredients, herbs and sauces as well as locally-made biscuits  vs  competitors.  While  we  think  24-hr  Mustafa  Centre  offers  a  wider  range  of  product offering at that hour, we believe the success of the Geylang store is due  to  its  unique  location,  which  is  evidently  filled  with  night-owls  who  prefer  to  do  their grocery shopping in the wee hours of the morning. We have a BUY call on  the stock with a TP of S$0.53, pegged at 19x FY13F P/E.

Geylang  store  bustling  with  shoppers  at  2am.  The  Geylang  store  has  achieved  operational  profitability  since  day  one  and  broke  even  after  just  one  month.  The  store  spans  11k  sf  over  two  floors.  We  note  that  the  ground  floor  was  filled  with  shoppers  who  appear  to  purchasing  fresh  items  such  as  vegetable  and  fruits  whilst  the  second  floor,  which  carry  dry  items  such  as  cooking  sauce,  ingredients  and  canned  food  was  relatively  quiet.  Operations  seem quite efficient with only one cashier.

Sheng  Siong vs Mustafa Centre.  As a basis of comparison,  we proceeded to  Mustafa Centre to check out the crowd and product offerings there. Mustafa has  recently  undergone  an  extension  and  is  Singapore's  largest  24-hour  mall  spanning 150k sf. We were very impressed with its new supermarket area which  carries a wider variety of vegetables and fruits. While we think Mustafa offers a  wider range of product offerings, we believe the success of the Geylang store is  due to  its unique  location,  which is evidently filled  with night-owls who prefer to  do their grocery shopping in the wee hours of the morning.

 Source: OSK