Sheng Siong Group Ltd

  • TickerSSG
John Cheong Ming Chern
  • John Cheong Ming Chern

Sheng Siong Group (SSG SP) - 2Q21: Above expectations; Demand to taper...

SSG’s 2Q21 net profit of S$35m (-24% yoy) was above expectations, with 1H21 forming 62% of our full-year estimates. 2Q21 fell 18% yoy given the high base in 2Q20 while gross margin expanded 0.8ppt from a better sales mix. We expect demand to taper off in the coming quarters, as Singapore pivots from a pandemic to an endemic approach in dealing with COVID-19. Maintain HOLD with a 1% lower target price of S$1.73 (23x 2022F PE) as we roll over our valuation base year to 2022.

John Cheong Ming Chern
  • John Cheong Ming Chern

Sheng Siong Group (SSG SP) - 1Q21: Within expectations; Demand to tape...

SSG’s 1Q21 net profit of S$30.8m (+7.7% yoy) was within expectations, forming 29% of our full-year estimates. Revenue grew at a slower pace (+2.7% yoy) given the high base in 1Q20 while gross margin expanded 0.6ppt from better input prices. We expect demand to taper off in the coming quarters, in line with the containment of the pandemic and the progressive rollout of vaccinations in Singapore. Maintain HOLD with an unchanged target price of S$1.74.

John Cheong Ming Chern
  • John Cheong Ming Chern

Sheng Siong Group (SSG SP) - 2020: Within expectations; Gradual modera...

4Q20 net profit of S$32m (+85% yoy) was within expectations with full-year earnings of S$139m (+83% yoy) forming 104% of our estimates. Similar to 3Q20, the growth was led by elevated demand and better operating leverage as home consumption continues to support sales. We expect a moderation going into 2021 as Singapore has transitioned to Phase 3 and the rollout of the COVID-19 vaccination programme. Maintain HOLD with an unchanged target price of S$1.74. Entry price: S$1.50.

John Cheong Ming Chern ... (+2)
  • John Cheong Ming Chern
  • Joohijit Kaur Jaztar Singh

Sheng Siong Group (SSG SP) - 3Q20: Gradual moderation of demand going ...

SSG’s 3Q20 net profit of S$32m (+54% yoy) was ahead of expectations, led by exceptionally high sales and better operating leverage. This trend could continue into 4Q20 but we do expect a gradual moderation going into 2021 as Singapore could transition into Phase 3 of reopening. We raise our net profit forecasts for 2020-21 by 11.7% and 6.5%. Downgrade to HOLD with a target price of S$1.74, pegged at 24.6x 2021F PE. Entry price: S$1.58.

John Cheong Ming Chern ... (+2)
  • John Cheong Ming Chern
  • Joohijit Kaur Jaztar Singh

Sheng Siong Group - 2Q20: Expect COVID-19 tailwinds to persist; Upgrad...

2Q20 net profit of S$46m was above expectations, with 1H20 earnings forming 76%/77% of our/consensus 2020 forecasts. The growth was led by exceptional sales and higher gross margins on the back of elevated demand due to the implementation of the circuit breaker. Although we do expect demand to moderate from the easing of circuit breaker measures, it is likely to be gradual. We raise our 2020 earnings forecast by 22%. Upgrade to BUY with a higher PE-based target price of S$1.95.

John Cheong Ming Chern
  • John Cheong Ming Chern

Sheng Siong Group (SSG SP) - 2Q21: Above expectations; Demand to taper...

SSG’s 2Q21 net profit of S$35m (-24% yoy) was above expectations, with 1H21 forming 62% of our full-year estimates. 2Q21 fell 18% yoy given the high base in 2Q20 while gross margin expanded 0.8ppt from a better sales mix. We expect demand to taper off in the coming quarters, as Singapore pivots from a pandemic to an endemic approach in dealing with COVID-19. Maintain HOLD with a 1% lower target price of S$1.73 (23x 2022F PE) as we roll over our valuation base year to 2022.

John Cheong Ming Chern
  • John Cheong Ming Chern

Sheng Siong Group (SSG SP) - 1Q21: Within expectations; Demand to tape...

SSG’s 1Q21 net profit of S$30.8m (+7.7% yoy) was within expectations, forming 29% of our full-year estimates. Revenue grew at a slower pace (+2.7% yoy) given the high base in 1Q20 while gross margin expanded 0.6ppt from better input prices. We expect demand to taper off in the coming quarters, in line with the containment of the pandemic and the progressive rollout of vaccinations in Singapore. Maintain HOLD with an unchanged target price of S$1.74.

John Cheong Ming Chern
  • John Cheong Ming Chern

Sheng Siong Group (SSG SP) - 2020: Within expectations; Gradual modera...

4Q20 net profit of S$32m (+85% yoy) was within expectations with full-year earnings of S$139m (+83% yoy) forming 104% of our estimates. Similar to 3Q20, the growth was led by elevated demand and better operating leverage as home consumption continues to support sales. We expect a moderation going into 2021 as Singapore has transitioned to Phase 3 and the rollout of the COVID-19 vaccination programme. Maintain HOLD with an unchanged target price of S$1.74. Entry price: S$1.50.

John Cheong Ming Chern ... (+2)
  • John Cheong Ming Chern
  • Joohijit Kaur Jaztar Singh

Sheng Siong Group (SSG SP) - 3Q20: Gradual moderation of demand going ...

SSG’s 3Q20 net profit of S$32m (+54% yoy) was ahead of expectations, led by exceptionally high sales and better operating leverage. This trend could continue into 4Q20 but we do expect a gradual moderation going into 2021 as Singapore could transition into Phase 3 of reopening. We raise our net profit forecasts for 2020-21 by 11.7% and 6.5%. Downgrade to HOLD with a target price of S$1.74, pegged at 24.6x 2021F PE. Entry price: S$1.58.

John Cheong Ming Chern ... (+2)
  • John Cheong Ming Chern
  • Joohijit Kaur Jaztar Singh

Sheng Siong Group - 2Q20: Expect COVID-19 tailwinds to persist; Upgrad...

2Q20 net profit of S$46m was above expectations, with 1H20 earnings forming 76%/77% of our/consensus 2020 forecasts. The growth was led by exceptional sales and higher gross margins on the back of elevated demand due to the implementation of the circuit breaker. Although we do expect demand to moderate from the easing of circuit breaker measures, it is likely to be gradual. We raise our 2020 earnings forecast by 22%. Upgrade to BUY with a higher PE-based target price of S$1.95.

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