- 9M24 revenue met our expectations, but PATMI
exceeded at 75%/79% respectively of our FY24e forecast. Progressive wage
reimbursement and gross margins were higher than expected. Gross margin
was a record 31.3% in 3Q24 from higher fresh product contribution and
margins.
- In 3Q24, Sheng Siong opened two new stores in
Singapore, bringing the total to 73 (or +1.4% expansion in space).
Another new store opened in October, and Toa Payoh store acquisition is
pending completion by the end of this year. Furthermore, five new stores
are waiting for their tender results from HDB.
- We raised our FY24e forecast by 5% to S$145.8mn.
Our ACCUMULATE recommendation is maintained, and the target price has
increased from S$1.66 to S$1.74, based on a historical PE of 18x. Sheng
Siong will at least open five new stores in FY24. This will almost
triple the average of two new stores per year over the past three
years. New stores will provide at least 6% points of revenue growth
next year. The unknown has been sluggish in same-store sales of around
2%, which includes the recent GST hike.
