Phillip Securities analyst Paul Chew maintained a Buy rating on Sheng Siong Group Ltd. today and set a price target of S$2.30.
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Paul Chew has given his Buy rating due to a combination of factors including Sheng Siong Group Ltd.’s strategic expansion and strong financial performance. The company has significantly increased its store footprint by 11% year-over-year, with plans to open additional stores, which is expected to drive revenue growth. Despite the pressure on operating margins from increased staff costs, the company has achieved record gross margins, supported by a higher mix of fresh food and direct sourcing.
Furthermore, Sheng Siong’s valuation is being re-rated in line with its accelerated growth, with a target price increase reflecting this positive outlook. The company’s robust financial metrics, such as a high return on equity and a healthy dividend yield, further bolster the confidence in its stock. The anticipated operating leverage from new store sales and the deceleration of wage growth are expected to enhance earnings in the future, justifying the Buy recommendation.
In another report released today, DBS also maintained a Buy rating on the stock with a S$2.30 price target.