Singapore Daily
Sheng Siong Group: No Expansion, No Buy; cut to Sell, $0.645 - TP $0.58
SSG SP | Mkt Cap USD712.9m | ADTV USD0.6m
Cut to a contrarian SELL. Our new TP of SGD0.58 is pegged at
19.2x FY14F PER, a 25% discount to regional peers on lower growth
potential and overall size. Transfer coverage to James Koh.
Sheng Siong is a single market, single category supermarket
operator in Singapore. We believe the limited growth potential does not
justify current lofty valuations of 22x PER.
Store openings this year are unlikely to reach management’s
earlier target of 10% increase in GFA each year. The company’s strategy
is reliant on lower rental locations, an approach we believe is becoming
increasingly restrictive in Singapore.
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jameskoh@maybank-ke.com.sg
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