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$1.76.
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Paul Chew’s rating is based on Sheng Siong Group Ltd.’s strategic expansion and robust financial performance. Despite the FY24 results falling slightly below expectations, the company has been actively increasing its market presence by adding new stores, which has led to a 7% growth in store footprint in 2024. This expansion is expected to drive revenue growth in FY25, as competitors are reducing their presence in mature HDB estates, allowing Sheng Siong to capture a larger market share.
Additionally, Sheng Siong’s financial metrics remain attractive, with a return on equity of 27% and a dividend yield of 4.1%. The company also maintains a strong net cash position of S$353 million, providing a solid foundation for future growth. While rising staff costs due to the progressive wage model pose a challenge, Sheng Siong’s high gross margin operations in fresh food help offset these expenses. Overall, these factors contribute to Paul Chew’s Buy rating for Sheng Siong Group Ltd.
In another report released today, DBS also maintained a Buy rating on the stock with a S$1.90 price target.