In a report released today, Paul Chew from Phillip Securities maintained a Buy rating on Sheng Siong Group Ltd. (OV8 – Research Report), with a price target of S$1.89.
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Paul Chew has given his Buy rating due to a combination of factors that highlight Sheng Siong Group Ltd.’s growth potential and strategic positioning. The company is experiencing a significant expansion in its store footprint, with plans to open at least eight new stores in FY25, marking the largest expansion since 2018. This growth is primarily driven by competitors exiting the market, allowing Sheng Siong to capture additional market share and scale.
Furthermore, Sheng Siong’s financial performance is strong, with a 6% year-over-year increase in PATMI, supported by a rise in gross margins due to higher fresh food contributions and improved purchasing efficiencies. Despite challenges such as increased operating expenses from higher wages and new store leases, the company’s aggressive expansion and market share gains are expected to offset these costs. The attractive financial metrics, including a high return on equity and a solid dividend yield, further support the Buy rating.
According to TipRanks, Chew is ranked #677 out of 9371 analysts.
In another report released yesterday, CGS-CIMB also reiterated a Buy rating on the stock with a S$1.90 price target.