Helping their shareholders beat inflation by increasing dividend payouts.

 

Sheng Siong (SGX: OV8) is a Singapore-grown supermarket chain with 66 outlets in our country. The company has also expanded into China to grow its business further.

For Sheng Siong’s first half of 2022, revenue dipped 0.7% year-on-year to S$676.8 million as COVID-19 measures were lifted earlier this year. The company explained that the easing “led to increased outdoor dining and overseas travel, especially during the June school holidays, which in turn returned sales revenue to more normalised pre-pandemic levels”.

However, despite the lower revenue, Sheng Siong’s net profit rose 2.1% to S$67.5 million for 2022 first-half. This resulted in its net profit margin improving from 9.7% to 10%.

The company has maintained its practice of paying stable dividends. For the latest period, Sheng Siong’s interim dividend per share increased to 3.15 Singapore cents, up 1.6% from 3.10 Singapore cents last year.

Sheng Siong shares are trading at S$1.63 each at the time of writing, translating to a P/E ratio of 18x and a dividend yield of 3.9%.

Consumers chose to dine at home to reduce excessive spending

 

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Analysts positive on Sheng Siong as inflationary pressures rise (13 Jul 2022, The Business Times)

• With rising inflation, Sheng Siong Group will see an increase in demand for its groceries, as consumers switch to more economical home-cooked meals, rather than spend on dining out • The easing of Covid-19 restrictions, which has led to a moderation in demand, will be offset by a boost in inflation-induced demand for the value-for-money supermarket chain, as consumers choose to dine at home to reduce excessive spending