C
onsu
mer
Sta
ple
s Sin
gapore
1.57
July 31, 2021
THIS REPORT HAS BEEN PREPARED BY MAYBANK KIM ENG RESEARCH
SEE PAGE 24 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Co. Reg No: 198700034E MICA (P) : 099/03/2012
Tear Sheet Insert
Kareen Chan [email protected] (65) 6231 5926
Sheng Siong Group (SSG SP)
Prefer a promo price
Best days are over; Initiate SELL
Initiate coverage on SSG with SELL as it’s unlikely to see another windfall
year as more people will dine out as the ban should be lifted in 4Q21
once vaccination rate passes 80% in the city. Also, near-term catalysts
are limited as new store opening visibility is low. All told, we forecast
FY22 EPS to decline 7% YoY Our TP of SGD1.33 is based on 19.5x FY22E
EPS, or -0.5 SD below its historical mean. Take profit on strength and
switch to ThaiBev (THBEV SP, CP: SGD0.67, TP: SGD0.91) and/or
ComfortDelGro (CD SP, CP: SGD1.55, TP: SGD1.88) for reopening plays.
Industry becoming less favourable
Euromonitor projects supermarket sales to decline by 5% CAGR from
2020-2023E. This is because supermarket sales are likely to normalise in
the near to medium term as consumers switch to eating outside. The
high base sales effects and gradual easing of dining-out measures in 4Q21
due to acceleration of vaccination will drive the impending industry
decline. We believe SSG, being the second largest supermarket operator
in Singapore, is vulnerable to such industry headwinds. At the same time,
the pandemic has also accelerated food delivery, which could change
consumers’ dining habits post-Covid. Meanwhile, its China store
expansion plan is still at an early stage and China sales make up only 2%
of group revenue. Therefore, we estimate revenue per sqft to taper to
6% CAGR to SGD2,000 by FY23E from SGD2,423 in FY20.
Fewer new store openings
New store opening has been a significant driver for SSG over the past few
years. However, we are seeing limited visibility due to much fewer HDB
tenders. Given disruption to the construction industry caused by the
pandemic, there are currently no successful shop tenders. Tenders are
more likely towards the end of 2021 to 2023 as HDB rushes to clear the
backlog. As such, our forecast assumes one new Singapore store for
FY21E, three in FY22E and FY23E. This translates to a retail space CAGR
of 5%, below its average of 12% between 2017 and 2020. With tapering
demand and slower increase in new store opening, we forecast FY22 EPS
to decline 7% YoY.
Sell on strength; switch to re-opening plays
SSG is trading at 23x FY22E P/E, which is a 65% premium to its Asian
peers. We prefer a better entry point and/or take profit on strength
given its near- to medium-term earnings downcycle, as well as potential
market rotation to post-Covid beneficiaries. Higher-than-expected new
store openings and/or slower tapering of demand could pose upside risk
to our TP.
Share Price SGD 1.57
12m Price Target SGD 1.33 (-12%)
SELL
Company Description
Statistics
52w high/low (SGD)
3m avg turnover (USDm)
Free float (%)
Issued shares (m)
Market capitalisation
Major shareholders:
29.8%
9.2%
9.1%
1,504
5.8
Mass-market supermarket operator. Sheng Siong
Group is the second largest supermarket operator by
market share.
Sheng Siong Holdings Pte Ltd.
LIM HOCK CHEE
LIM HOCK ENG
1.85/1.49
41.7
SGD2.4B
USD1.7B
Price Performance
80
100
120
140
160
180
200
220
240
260
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21
Sheng Siong - (LHS, SGD) Sheng Siong / Straits Times Index - (RHS, %)
-1M -3M -12M
Absolute (%) (1) 1 (8)
Relative to index (%) (2) 3 (26)
Source: FactSet
FYE Dec (SGD m) FY19A FY20A FY21E FY22E FY23E
Revenue 991 1,394 1,355 1,284 1,278
EBITDA 111 187 159 140 140
Core net profit 76 140 117 102 102
Core EPS (cts) 5.0 9.3 7.8 6.8 6.8
Core EPS growth (%) 7.4 85.2 (16.8) (12.6) (0.5)
Net DPS (cts) 3.5 5.3 5.3 5.3 5.3
Core P/E (x) 24.6 16.6 20.2 23.1 23.2
P/BV (x) 6.0 6.3 5.8 5.5 5.2
Net dividend yield (%) 2.8 3.4 3.4 3.4 3.4
ROAE (%) 25.1 40.9 29.9 24.2 22.9
ROAA (%) 15.6 22.9 15.5 11.9 11.5
EV/EBITDA (x) 16.2 11.3 13.7 14.9 15.3
Net gearing (%) (incl perps) net cash net cash net cash net cash net cash
Consensus net profit - - 105 108 113
MKE vs. Consensus (%) - - 10.8 (5.7) (9.8)
July 31, 2021 2
Sheng Siong Group
Value Proposition
Overtook Dairy Farm Int’l (DFI SP, CP: SGD4.13, Non-Rated)
as the 2nd largest supermarket operator in 2018 in terms of
market share in Singapore.
Stores spanning across HDB heartlands, which helps SSG
keep tight control over rental costs.
The emphasis on the sale of fresh-items has kept its sales
mix favourable. This has resulted in improvement in gross
profit margin over the past few years.
However, the supermarket operator is unlikely to see
another windfall year as more people will dine out as the
ban should be gradually lifted in 4Q21.
Gross profit margin
Source: Company data
Price Drivers
Historical share price trend
Source: Company, Maybank Kim Eng
1. Gross margin exceeded 26% for the first time in 2Q16,
driven by improvement in bulk handling and favourable
sales mix towards higher margin fresh produce.
2. Stock corrected and became range-bound after
Amazon’s plan to enter ASEAN.
3. Top line continued to benefit from new store openings
and higher gross profit margin.
4. Lockdown resulted in elevated demand, while positive
operating leverage drove a sharp jump in the
bottomline.
5. Stock price corrected from its record high due to the
easing of social-distancing measures.
Financial Metrics
We forecast a three-year revenue CAGR of -3% due to
tapering sales and fewer store openings as there should be
less HDB tenders amid the pandemic. Supermarket sales
should decline once the dining ban is lifted and more eat
outside. .
We expect gross profit and net margin to continue to
benefit from favourable sales mix and operating leverage.
Capex likely to ease in FY21E, as there are currently no
HDB tenders due to construction delays. We expect its balance sheet to remain strong with net cash
of SGD272m.
Net profit and net margin forecasts
Source: Company data, Maybank Kim Eng
Swing Factors
Upside
Stronger-than-expected revenue growth if the dining ban
is extended.
More tenders for HDB commercial properties for new
supermarkets than expected.
More people prefer to eat at home rather than dining
out.
Downside
Sales growth slows more than expected, as dining out
ban is lifted and travel borders reopen.
Sudden and unexpected jump in input prices that cannot
be passed on to consumers. Gross profit margin will
decline as a result.
Change in consumer habits to dining out more or food
delivery services instead if home-cooked meals.
26.9%
27.4%27.5%
27.2% 27.2%
26.6%
26.7%
26.8%
26.9%
27.0%
27.1%
27.2%
27.3%
27.4%
27.5%
27.6%
2019 2020 2021E 2022E 2023E
80
100
120
140
160
180
200
220
240
260
280
0.90
1.00
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
Jul-16 Jul-17 Jul-18 Jul-19 Jul-20
Sheng Siong - (LHS, SGD)
Sheng Siong / Straits Times Index - (RHS, %)
76.0
140.6117.0
102.3 101.8
7.7%
10.1%8.6%
8.0% 8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
0.0
50.0
100.0
150.0
2019 2020 2021E 2022E 2023E
Net profit Net profit margin
1
2
3
5
4
July 31, 2021 3
Sheng Siong Group
Risk Rating & Score¹ 21.4 (Medium)
Score Momentum² -4.0
Last Updated 14 April 2021
Controversy Score³ (Updated: 1 Jan 2000)
0 – No Reported Incident
Business Model & Industry Issues
SSG has identified food and product safety as its top priority in its ESG goals. SSG recognises its responsibility as the final
gatekeeper in the supply chain to safeguard the health, safety and interests of its customers. This also helps build brand
loyalty with its customers.
SSG is also committed to promoting sustainable sourcing along its value chain. It will continue to practice diversification in its
sourcing strategy, while ensuring its produce remain affordable and competitively priced,
With a rising awareness of leading a healthy lifestyle in Singapore, SSG believes it has a role to play by providing healthier and
more nutritious options for customers. SSG regularly reviews its range and selection of “healthier choice” and “trans-fat free”
products to determine the baseline for target setting. It will continuous develop new house-brand products to meet “healthier
choice” and/or “trans-fat free criteria”.
Material E issues
Some shoppers have become increasingly concerned about
the excessive use of plastic bags and SSG has taken a more
proactive stance to campaign for a reduction in the use of
plastic bags among its shoppers. Despite a reduction in
2019, the trend was reversed in 2020 with a 5% increase
due to higher business volume amid Covid-19.
Introduction of the mandatory reporting framework for
packaging postponed until this year.
SSG has partnered with a handful of suppliers to reuse
plastic crates for delivering fresh food.
Styrofoam boxes typically used by suppliers to deliver
temperature-sensitive products are washed, sanitised and
reused internally. Its overall recycling rate was 79.7% in
2020.
SSG is also committed to promoting sustainable sourcing.
86% of its house-brand paper products are certified under
the Forest Stewardship Council, while carrying a selection
of sustainable seafood such as Norwegian salmon, frozen
shrimp paste and frozen Norwegian mackerel.
Key G metrics and issues
SSG has 10 directors on its board, of which two (~20%) are
females; 4 out of 10 directors are independent.
Its executive directors, Mr Lim Hock Eng, Mr Lim Hock
Chee and Mr Lim Hock Leng are brothers. At the same
time, executive director Ms Lin Ruiwen is the daughter of
Mr Lim Hock Eng.
Independent directors chair the nomination, audit,
investment and remuneration committees.
SSG has reported zero incidents of discrimination.
In 2020, the top key management received SGD2.9m (2%
of net income).
SSG had no material related-party transactions that
negatively affected minority interest in the past.
No corruption cases reported.
Material S issues
Keeping essential products and produce affordable is
critical for SSG to remain competitive. As such, SSG has
extended a special 3% discount to senior citizens every
Wednesday for another year till 2022.
SSG works closely with the newly formed Singapore Agency
to ensure its farm-fresh produce and processed food
products are in compliant with the city’s food-safety
standards.
SSG is ISO22000:2005 certified for food-safety
management.
In 2020, SSG’s employees received bonuses ranging from
4.68 -15.72 months, depending on workers’ grade. As a
result, staff turnover rate declined to 24.3% from 33.5% in
2019.
¹Risk Rating & Score - derived by Sustainalytics and assesses the company’s exposure to unmanaged ESG risks. Scores range between 0 - 50 in order of increasing severity with low/high scores & ratings representing negligible/significant risk to the company’s enterprise value, respectively, from ESG-driven financial impacts. ²Score Momentum - indicates changes to the company's score since the last update – a negative integer indicates a company’s improving risk score; a positive integer indicates a deterioration. ³Controversy Score - reported periodically by Sustainalytics in the event of material ESG-related incident(s), with the impact severity scores of these events ranging from Category 0-5 (0 - no reports; 1 - negligible risks; ...; 5 - poses serious risks & indicative of potential structural deficiencies at the company).
July 31, 2021 4
Sheng Siong Group
1. Focus charts
Fig 1: Singapore is accelerating vaccination
Source: Ourworldindata
Fig 2: Supermarket industry forecasted to decline at 5.3% CAGR between 2020 and 2023E
Source: Euromonitor
Fig 3: We expect revenue per sqft to taper amid a more normalised Covid-scenario
Source: Maybank Kim Eng
Fig 4: Meanwhile, we expect new retail area to grow at a slower rate
Source: Company data, Maybank Kim Eng
Fig 5: P/E - 10-year mean
Source: Factset
Fig 6: MKE vs consensus
Source: Bloomberg, Maybank Kim Eng
1916
24232320
2100 2000
0
500
1000
1500
2000
2500
3000
2019 2020 2021E 2022E 2023E
Revenue per sqft
CAGR: -6.1%
404
496529
575 584 612 639
300
350
400
450
500
550
600
650
700
2017 2018 2019 2020 2021E 2022E 2023E
Total retail area ('000 sqft)
CAGR: 12%
CAGR: 5%
FY21E FY22E FY23E
Revenue (SGD 'm) 1,355.2 1,284.2 1,277.8
Gross profit margin (%) 27.5 27.2 27.2
Net profit (SGD 'm) 116.8 102.0 101.5
Target Price (SGD) 1.33
Revenue (consensus) 1276 1270 1346
Gross profit margin (consensus) 27.5 27.2 27.3
Net profit (consensus) 109 107.6 114
Target Price (SGD) 1.75
Revenue (MKE/ consensus) 106% 101% 95%
Net profit (MKE/ consensus) 107% 95% 89%
July 31, 2021 5
Sheng Siong Group
2. Investment thesis
2.1 Supermarket industry to face headwinds
Euromonitor projects supermarket sales in Singapore to decline by a CAGR
of 5.3% from 2020-2023E. This is because supermarket sales are likely to
normalise in the near to medium term as diners switch to eating out as
food centres and restaurants reopen in 4Q21 following the current ban.
Fig 7: Forecasted supermarket sales (2018-2023E)
Source: Euromonitor
Supermarket sales already started to decline in Mar’21. This suggests sales
are tapering off from a high base last year.
Fig 8: Supermarket sales YoY growth (Jan’20 – May’21)
Source: Singstats
Going forward, we think SSG’s sales will also taper against the backdrop of
easing of dining out restrictions, as well as the rising trend of food
delivery.
3,524 3,560
4,579 3,914 3,731 3,883
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2018 2019 2020 2021E 2022E 2023E
-40%
-20%
0%
20%
40%
60%
80%
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21
July 31, 2021 6
Sheng Siong Group
Easing of social-distancing measures
SSG has benefitted from elevated demand amid the Covid-19 Circuit
Breaker in FY20. However, we opine SSG is unlikely to experience another
windfall this year and we expect tapering demand in the coming quarters
as social-distancing measures may be eased in 4Q21.
We see less likelihood of a lockdown again as compared to a year ago due
to wider vaccination in Singapore, and improved contact tracing and
testing capabilities to better contain the virus.
Additionally, Minister for Finance Lawrence Wong, who co-chairs the
multi-ministry task force for tackling the pandemic, said some social-
distancing measures will be progressively eased as vaccination rates go up.
Currently, c.62.8% of Singapore’s population has received at least one jab
of the vaccine and it’s accelerating the programme and will increase this
by 70%. The country is targeting to achieve herd immunity and is looking
at relaxing its border rules by Sep’21. This should result in relaxation of
the current dining ban.
Fig 9: Percentage of people in Singapore that received at least one dosage of the vaccine
Source: Ourworldindata
In addition, Singapore is looking to allow quarantine-free travel for those
who are fully vaccinated against Covid-19 from September, when 80% of
Singapore’s population should be inoculated. The city is also set to review
whether to loosen curbs in early Aug, when two-thirds of its population
would be fully vaccinated.
Grocery footfalls could return to pre-Covid levels under normalised
scenario
Life in the US is gradually returning to normal. This is because of the
relatively high vaccination rate (at least one jab: 55.9%, fully vaccinated:
48.3%) and as infections are better contained. On 13 May, the US Centres
for Disease Control and Prevention advised that fully vaccinated people do
not need to wear masks outdoors and could avoid wearing them indoors in
most places. Additionally, fully immunised people do not need to
physically distance themselves in most places.
Due to a higher vaccination rate, consumers are going to supermarkets
less frequently as they are dining out more. Based on Google Mobility
report, footfalls at grocery stores and pharmacies are back to an average
62.8%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21
July 31, 2021 7
Sheng Siong Group
of -3% pre-Covid levels YTD. This presents potential downside risks for
footfalls at grocery stores.
Fig 10: Average YTD mobility trends for places like grocery markets and pharmacies
Source: Google Mobility report
Overall, Singapore is moving progressively towards reopening in the near
term. As such, SSG is likely to face industry headwinds arising from
tapering revenue in the near to medium term as grocery demand
normalises.
More F&B players finding ways to get into consumers’ palate
At the same time, food delivery is increasingly seen as another dining
option. The pandemic has accelerated growth of food delivery and this
trend is also fuelled by the concept of cloud kitchens – which operate
exclusively in the delivery-only segment, without their own dining space.
The cloud-kitchen model cuts down on operating costs as a smaller space
is needed for food preparation. In addition, cloud kitchens are also acting
as a sandbox for virtual F&B brands to test out new concepts.
There are currently at least seven cloud kitchen players in the Singapore
market, with plans to open more cloud kitchens across the island. This is a
meaningful increase from just two players in 2019.
Fig 11: The number of cloud-kitchen players in Singapore market (2019 vs 2021)
2019 2021
Deliveroo Grab
Foodpanda Deliveroo
Foodpanda
Smart City Kitchens
Tiffins Lab
Select Group
Kishin RK
Source: Maybank Kim Eng
At the same time, we forecast food delivery revenue to grow by a CAGR of
11% by 2025, signalling F&B and food delivery platform players’ vision to
push their offerings to consumers even in the post-Covid scenario.
-3.8%
3.1%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
US SG
July 31, 2021 8
Sheng Siong Group
Fig 12: Online food delivery (2017-2024E)
Source: Maybank Kim Eng
Concurrently, Singaporeans appears to be more receptive to food delivery.
Compared to the global average of 33%, 44% of Singaporeans have visited
restaurant delivery websites or meal-kit-delivery services online.
Convenience and health considerations were the main factors that drove
this trend.
Additionally, SSG is comfortable with maintaining revenue per sqft of
SGD2,000 in a post-Covid scenario, where we anticipate relaxation of
travel borders by FY23E. We therefore expect SSG’s revenue per sqft
growth to decline at a CAGR of 6.2% between FY20 and FY23E against the
backdrop of a more normalised Covid scenario.
Fig 13: Estimated revenue per sqft – 2019-2023E
Source: Maybank Kim Eng
Rising commodity prices present more downside risks to SSG’s gross
profit margin
SSG has benefitted from rising gross margin over the years against the
backdrop of easing commodity prices. However, global food prices are
seeing a sharp increase in a decade and the cost of labour, transport and
shipping is expected to push prices higher in the coming months. This
presents more downside risks for SSG’s gross margin going forward.
1916
24232320
21002000
0
500
1000
1500
2000
2500
3000
2019 2020 2021E 2022E 2023E
Revenue per sqft
CAGR: -6.2%
206.4
268
342.1
464.2
541.5
606.6658.5
698.3
0
100
200
300
400
500
600
700
800
2017 2018 2019 2020 2021E 2022E 2023E 2024E
USD 'm
CAGR: 11%
July 31, 2021 9
Sheng Siong Group
Coupled with a reduction of demand for its household brands on the back
of a shift towards an endemic phase, we forecast SSG’s gross margin to
narrow to 27.2% by FY23E.
Fig 14: CRB Index Foodstuff – 2007-2021
Source: Maybank Kim Eng
Fig 15: Gross profit margin – 2019 – 2023E
Source: Company data, Maybank Kim Eng
Additionally,
2.2 Store openings disrupted by Covid
SSG has benefitted from its strategy of opening new stores since 2018 (10
in 2018, five in 2019 and four in 2020). This has helped the group to be
well positioned for heightened demand during Covid-19.
SSG opened five stores and closed one in 2020, with total store count of
63 and retail space of 571,150sf (+7.9% YoY) in Singapore. The group has
been growing its retail area at a CAGR of 4.6%.
Fig 16: Historical total retail area (2012-2020)
Source: Company data
However, we are seeing clouded visibility of new store opening going
forward. SSG has shared that its tender for the only two HDB commercial
units (Blk 115A Alkaff Crescent and Blk 610 Tampines North Drive) was
unsuccessful for the year. Given the disruption to the construction
industry caused by the pandemic, there are currently no new shop tenders.
250
300
350
400
450
500
Mar-07 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-21
Last price
26.9%
27.4%27.5%
27.2% 27.2%
26.6%
26.7%
26.8%
26.9%
27.0%
27.1%
27.2%
27.3%
27.4%
27.5%
27.6%
2019 2020 2021E 2022E 2023E
400 400 404431
450
404
496529
575
300
350
400
450
500
550
600
2012 2013 2014 2015 2016 2017 2018 2019 2020
Total retail area ('000 sqft)
July 31, 2021 10
Sheng Siong Group
However, it’s likely that more new shop tenders could be released
towards the end of 2021 and 2022 as HDB rushes to clear the backlog.
As such, our forecast assumes one in new store opening (China) in FY21E
and three new stores in FY22E and three in FY23E. This translates to a
three-year CAGR of 5%, which is slower than its average of 12% between
2018 and 2020.
Fig 17: Estimated total retail area – 2021E-2023E
Source: Company data, Maybank Kim Eng
With tapering demand and slower rate of new store opening, we are
estimating EPS to decline at a CAGR of 10.2% between FY20-23E.
2.3 Supermarket with low e-commerce exposure
No intention to expand its e-commerce capability
In 2014, SSG started the “allforyou.sg” online shopping platform for groceries, which offers e-commerce services in almost all postal districts in Singapore. The main purpose of the e-commerce platform is to increase their outreach to customers in areas where SSG does not have a physical presence. In 2019, the e-commerce’s share of the group’s revenue was between 1% and 2%. In “allforyou.sg”, delivery slots appears limited, suggesting that SSG could have reached its maximum capacity for its e-commerce business. However, management is not looking to expand e-commerce capability extensively at this point.
404
496529
575 584612
639
300
350
400
450
500
550
600
650
700
2017 2018 2019 2020 2021E 2022E 2023E
Total retail area ('000 sqft)
CAGR: 12%
CAGR: 5%
July 31, 2021 11
Sheng Siong Group
Fig 18: No available delivery slots
Source: Company data
Consumers sticking with their online grocer The pandemic has accelerated the adoption of online grocery, fuelled by shoppers avoiding public places, government orders to stay at home and the continued need for groceries and essential goods. According to grocery e-commerce specialist Mercatus and research firm Incisiv Projects, online grocery will swell by 21.5% of total US grocery sales by 2025, more than doubling its current share of the overall grocery market.
Fig 19: Online grocery penetration rate (2021E-2025E)
Source: Mercatus, Incisiv Projects
The study also stated that post-pandemic, 90% of e-grocery customers are expected to continue shopping online and only 7% of the online grocery shoppers will return to brick-and-mortar stores. Elsewhere in China, fresh produce and groceries largely remained offline until Covid-19 hit. The disruption has also substantially accelerated the adoption of online fresh food buying and many continued to rely on online delivery after the return to normalcy.
2.7% 3.4%
10.2%
12.5%
14.6%
16.9%
19.1%
21.5%
4.3%5.4%
6.8%
8.5%
10.7%
13.5%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2018 2019 2020 2021E 2022E 2023E 2024E 2025E
Grocery eCommerce sales % (Post-Covid)
Grocery eCommerce sales % (Pre-Covid)
July 31, 2021 12
Sheng Siong Group
Based on a Chinese consultancy, iResearch, the web penetration for fresh food produce is expected more than double to 20% by 2023, from less than 10% in 2020. In our view, Singapore’s online grocery market could potentially see elevated sales proportion from online grocery in a post-Covid scenario. According to Google Trends - which tracks the search interest of a particular search term over time across Google Search, Google News, Google Image, Google shopping and YouTube - RedMart (owned by Alibaba-backed Lazada) has been leading the search terms compared to the rest of the grocers for the past five years.
Fig 20: Average Google interest among grocers – 2016 to 2021
Source: Google interest, Maybank Kim Eng
In our view, it could be harder for SSG to penetrate the online grocery market in the future given RedMart’s leading market position and investments made already. The leading online grocery retailer has raised over SGD55.1m in funding in over seven rounds between 2011 and 2015, before it was acquired by e-commerce platform Lazada for an undisclosed sum. SSG’s product mix has been focused on fresh food items and its entry into the e-commerce space would require SSG to pour in additional capex on cooling technologies and insulation materials for last-mile deliveries. In addition, Sheng Siong has explained that it is not at the stage to invest in ecommerce technology due to manpower issue.
2.4 Valuation summary
Our TP of SGD1.33 is based on 19.5x FY21E EPS, which is 0.5 S.D below (or
6% discount to) its historical mean of 20.8x. In our view, this is justified as
SSG is facing EPS decline (CAGR of 8.5% between FY20 and 23E) as we
expect social-distancing measures will ease in 4Q21, there are more dining
options and the slower rate of new store openings.
Fig 21: Valuation parameter
Historical mean - 10-year P/E (x) 20.8
Discount 6%
Target P/E multiple (x) 19.5
FY22E EPS (SGD) 0.071
Target price 1.33
Source: Maybank Kim Eng
0 10 20 30 40
Redmart
Fairprice Online
Amazon Fresh
Sheng Siong online
Giant online
July 31, 2021 13
Sheng Siong Group
Fig 22: 3-year forward P/E
Source: Factset
Fig 23: 5-year forward P/E
Source: Factset
Fig 24: 10-year forward P/E
Source: Factset
We therefore initiate coverage with a SELL and TP of SGD1.33. Take profit
on strength and switch to cyclical stocks/ beneficiaries of reopening.
Sheng Siong is trading at a 61% premium to its Asian peers. We identified
DFI SP as Sheng Siong’s direct comparable. We also include major listed
Asian and global supermarkets and staple retailers in our peer comparison.
We observe other peers are trading at an average of 13.9x FY22E P/E, or a
37% discount to Sheng Siong.
Fig 25: Peer comparison
Company Ticker Price Mcap Country of P/E (x) Div Yield (%) ROE (%) 3Y EPS CAGR
LC USD b listing FY1 FY2 FY3 FY1 FY2 FY1 FY2 (%)
Dairy Farm International DFI SP 4.04 5.47 Singapore 18.2 14.6 13.0 4.3 4.3 21.2 24.6 16.0
Yonghui superstores 601933 CN 4.02 5.91 China 17.9 13.4 16.6 3.0 3.0 9.5 12.3 8.6
Better Life Commercial Chain 002251 CN 6.86 0.92 China 23.6 18.6 20.4 1.5 1.5 3.3 4.0 36.9
Sun Art Retail SAR HK 4.93 6.05 Hong Kong 16.0 14.5 13.1 2.2 2.2 8.8 9.2 -1.5
Arcs Co Ltd ACL JP 2269 1.18 Japan 11.4 11.0 10.6 2.4 2.4 6.7 6.6 -2.4
Valor Holdings 9956 JP 2334 1.14 Japan 10.1 9.1 8.3 2.4 2.4 8.2 8.5 6.0
Puregold Price Club Inc PGOLD PH 39.55 2.27 Philippines 13.6 12.1 11.0 1.2 1.2 11.2 11.4 10.8
Average 16.9 13.9 14.0 3.0 3.0 11.8 13.5 8.3
Source: Factset, Maybank Kim Eng
With limited catalysts, we estimate SSG’s FY21/22/23E EPS to decline at
11%, with FY21/22/23E dividend yield of 3.2%.
The following are MKE’s Top 10 BUY calls with stronger fundamentals, an
average EPS growth of >2% and forward yield of >3.2%.
July 31, 2021 14
Sheng Siong Group
Fig 26: Coverage universe (BUYs)
Stock BBG M.Cap Rec Price TP Upside EPS gr. (%) P/E (x) ROE (%) P/B (x) Div Yield (%)
Code SGDm SGD SGD % CY21E CY22E CY21E CY22E CY21E CY22E CY21E CY22E CY21E CY22E
DBS DBS SP 56,675 Buy 29.54 33.71 14.1 39.7 7.5 11.4 10.2 12.1 12.1 1.4 1.3 3.7 4.7
OCBC OCBC SP 39,300 Buy 11.74 14.17 20.7 39.5 6.9 10.7 9.8 9.9 10.0 1.0 1 4.3 5.1
UOB UOB SP 31,976 Buy 25.58 29.34 14.7 37.2 12.3 10.7 9.1 9.2 9.9 1.0 1 4.7 5.5
Singtel ST SP 27,551 Buy 2.25 2.81 24.9 359.9 18.2 14.4 12.2 9.6 11.3 1.4 1.4 5.2 6.1
Venture VMS SP 4,032 Buy 18.66 22.00 17.9 11.3 6.4 15.8 13.8 12.5 12.6 2.0 1.9 4.0 4.0
Ascendas REIT AREIT SP 9,174 Buy 2.97 3.65 22.9 41.8 6.1 18.8 17.8 6.8 6.9 1.3 1.3 5.3 5.6
Frasers Ct.pt. FCT SP 3,086 Buy 2.45 2.90 18.4 34.6 8.3 19.6 19.1 6.1 5.4 1.0 1 5.1 5.2
ComfortDelGro CD SP 2,587 Buy 1.61 1.88 16.8 228.8 21.4 18.5 14.4 7.5 8.6 1.2 1.2 3.2 5.6
Genting SG GENS SP 7,532 Buy 0.84 1.16 38.1 295.0 91.5 60.0 26.2 3.5 6.6 1.3 1.3 1.2 2.4
ThaiBev THBEV SP 12,385 Buy 0.67 0.99 48.9 10.0 7.1 14.3 13.3 17.5 17.3 2.6 2.3 3.3 3.6
Source: Maybank Kim Eng
July 31, 2021 15
Sheng Siong Group
3. Financial analysis
3.1 P&L
We forecast revenue growth of -2.8% in FY21E and -5.2% in FY22E and -
0.5% in FY23E on the back of tapering revenue and slower rate of new
store openings.
We assume SSG’s gross profit margin to narrow slightly to 27.2% by FY23E
due to higher input prices, which is partially offset by favourable sales mix
and cost efficiencies.
Throughout our forecast horizon of FY21-23E, we expect revenue and
earnings decline to be primarily driven by tapering sales and negative
operating leverage. As a result, we expect net margin to be around 8.0-
8.6% over the same period. Excluding FY20, SSG’s EPS growth would have
been increasing at a CAGR of 10.2% between 2019 and 2023E
Fig 27: P&L assumptions
FYE 31 Dec (SGDm) 2019 2020 2021E 2022E 2023E Comments
Sales 991.3 1,394.00 1,355.20 1,284.20 1,277.80 Tapering revenue sqft and slower rate of new
store opening
Cost of goods sold -724.4 -1,012.10 -982.5 -934.9 -930.2
Gross profit 266.9 381.9 372.7 349.3 347.6
Operating expenses -174.3 -215.7 -234.2 -228.1 -227.0
Operating Profit 92.6 166.1 138.5 121.2 120.6
Net Int income/ (exp) -0.7 -1.0 -1.0 -1.0 -1.0
Net other non-op. JV+Assc. 0.0 0.0 0.0 0.0 0.0
Net extraordinaries 0.0 0.0 0.0 0.0 0.0
Pretax profit 91.9 165.1 137.4 120.1 119.5
Income taxes -16.2 -24.8 -20.7 -18.1 -18.0
Minority Interests 0.0 0.0 0.0 0.0 0.0
PATMI 75.8 140.3 116.8 102.0 101.5
EPS (SGD) 0.05 0.09 0.08 0.07 0.07
EBITDA (SGDm) 110.9 187.1 158.8 140.5 139.8
Gross margin (%) 26.9 27.4 27.5 27.2 27.2 Gross profit margin to taper back to pre-Covid
levels
Net margin (%) 7.7 10.1 8.6 8.0 8.0
Growth (YoY)
Revenue 11.30% 40.60% -2.80% -5.20% -0.50%
PATMI 1.40% 7.40% 85.20% -16.80% -12.60%
Source: Maybank Kim Eng
The following is the breakdown of revenue growth:
FYE 31 Dec (SGDm) 2019 2020 2021E 2022E 2023E
New stores sales growth 10.1% 10.2% 10.5% 2.0% 10.1%
Same store sales growth 1.7% 0.1% 29.1% -5.7% -16.3%
Store closure -5.4%
Supermarket in China 1.0% 1.0% 1.0% 1.0% 1.0%
Total revenue growth 7.4% 11.3% 40.6% -2.7% -5.2%
3.2 Balance sheet and cash flow
As of 2QFY21, SSG has a net cash position of SGD271.5m or SGD0.181/per
share. Given its strong balance sheet, we think that SSG could maintain its
DPS and we forecast a DPS of SGD0.05 in FY21-23E. This translates to a
dividend yield of 3.2% and a DPS payout ratio of 60%
We assume capex to remain relatively stable at 1.1-2% of total sales from
FY21-23E, it primarily comprises of maintenance capex and capex budget
for its expansion plan.
July 31, 2021 16
Sheng Siong Group
Fig 28: Capex and capex as % of sales – 2019E-2023E
Source: Company data, Maybank Kim Eng
3.3 MKE vs consensus
Fig 29: MKE vs consensus
FY21E FY22E FY23E
Revenue (SGD 'm) 1,355.2 1,284.2 1,277.8
Gross profit margin (%) 27.5 27.2 27.2
Net profit (SGD 'm) 116.8 102.0 101.5
Target Price (SGD) 1.33
Revenue (consensus) 1276 1270 1346
Gross profit margin (consensus) 27.5 27.2 27.3
Net profit (consensus) 109 107.6 114
Target Price (SGD) 1.75
Revenue (MKE/ consensus) 106% 101% 95%
Net profit (MKE/ consensus) 107% 95% 89%
Source: Company data, Maybank Kim Eng
4.8%
1.2%1.1%
2.0% 2.0%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
2019 2020 2021E 2022E 2023E
SGD 'm
Capex Capex to sales
July 31, 2021 17
Sheng Siong Group
4. Corporate information
4.1 Business overview SSG is the second largest supermarket operator in Singapore with 63 stores
located across the island. As at 2020, SSG has over 1,400 products under
23 house brands. In 2017, SSG opened its first overseas store in Kunming,
China and a second one in Jun’19.
Fig 30: Market share in Singapore (2015 to 2020)
Source: Euromonitor
A modern and more efficient version of wet markets
SSG’s brand positioning – affordability, with fresh food offerings that can
rival against wet markets. SSG’s key strength lies with its offering of
higher margin fresh foods, which has resulted in improving gross margin
over the years.
Fig 31: SSG’s gross profit margin (2014 -2020)
Source: Company data, Maybank Kim Eng
Higher gross profit margin is driven by lower input prices and shift towards
higher-margin fresh foods. In our view, this implies a market share gain
from wet markets.
40% 42% 42% 42% 42% 41%
23% 24% 24% 25% 26% 27%
29% 27% 25% 23% 22% 22%
4% 4% 4% 4% 4% 4%4% 3% 3% 3% 4% 4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 2018 2019 2020
NTUC Fairprice Sheng Siong Dairy Farm
Prime supermarket U Stars Others
24.2%
24.7%
25.7%
26.2%
26.8%26.9%
27.4%
22.0%
23.0%
24.0%
25.0%
26.0%
27.0%
28.0%
2014 2015 2016 2017 2018 2019 2020
July 31, 2021 18
Sheng Siong Group
This is supported by a National Environment Agency (NEA) survey
conducted in 2019, which found 39% of Singaporeans had not been to a
wet market in the previous 12 months. The numbers have been rising
steadily since 2014.
Fig 32: % of Singaporeans who had not been to a wet market: 2014, 2016, 2019
Source: todayonline
Cautious approach to its China business; unlikely to move the EPS
needle yet
SSG had also entered into a lease agreement for a retail space of c.
37,800 sqft in Kunming, China. The new store is expected to be
operational before the end of 3Q21. This will bring the group’s store count
to 63 in Singapore and three in China. However, the new store is not
expected to make a significant impact on the group’s EPS.
Currently, the revenue for its other two outlets in China accounts for only
2% of its total revenue. Management is taking a precautionary approach
with its expansion in China.
Wet markets are becoming less cost-efficient due to their lack of scale
Anecdotally, many wet market vendors also said that business has been
getting tougher for them over the years, as shoppers are increasingly
turning to supermarkets and grocery delivery services.
Given the slowing demand, the wet market vendors responded by ordering
less from suppliers. We think this would inevitably reduce bargaining
power and cost efficiencies as compared to SSG due to the lack of
economies of scale.
Going forward, the government announced that the inclusion of a wet
market “might only be considered” if there is strong community demand.
This signals a shift in public policy, which can be favourable to
supermarket operators.
23%
33%
39%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2014 2016 2019
July 31, 2021 19
Sheng Siong Group
5. Risks
SSG is exposed to a number of risks that could affect our views and
forecasts for the company. The most material risks are:
5.1 Disease outbreak affecting demand for food products
Any outbreak of diseases in livestock or food scares in the region such as
the avian influenza H5N1 virus, H1N1 influenza, salmonella, porcine
respiratory and encephalitis syndrome or the Nipah virus, may lead to a
reduction in the consumption of the affected type of food by consumers.
The reduction in demand may affect the sale mix of fresh food, resulting
in a contraction in gross profit margin.
5.2 Supply chain disruption
Supply chain disruption may lead to an increase in the prices of affected
food products, which SSG may not be able to pass on to its customers. Any
increase in input costs may adversely affect its financial performance.
Political and economic instability resulting from terrorist attacks and/or
armed conflicts could also negatively impact its suppliers’ business
operations and in turn SSG’s financial performance.
5.3 Rising labour costs
SSG’s business of grocery retailing is labour-intensive and its ability to
meet its labour requirements, whilst controlling wage and labour-related
costs, may be subject to numerous external factors, including the
availability of a sufficient number of suitable persons in the relevant work
force, prevailing wage rates, demographics and health and insurance costs.
At times, the grocery retailing industry has experienced a shortage of
skilled personnel, especially store managers. The supermarket industry
therefore competes against other grocery retailers and other retailers for
such skilled personnel.
As such, SSG may have to increase wages and benefits to attract and
retain qualified personnel or risk considerable employee turnover.
5.4 Competition risks
SSG faces intense competition from traditional grocery retailers such as
wet markets, supermarkets and hypermarkets, and from non-traditional
competitors such as convenience stores, petrol kiosk convenience stores
and restaurants.
Increased competition may result in lower sales and greater operating
costs and have an adverse effect on its financial performance. Its ability
to attract customers depends largely on a combination of location, quality,
price, service, selection and condition of groceries and other retail
products.
Pricing is a significant driver in consumers’ buying decisions and
competitors may engage in price competition, which may increase its
costs.
July 31, 2021 20
Sheng Siong Group
Bigger players may have greater supply or distribution networks, brand
recognition, or financial resources, and may be able to devote greater
resources to pricing and promotional programmes - by selling inventory at
below cost to drive sales increases. There can be no assurance SSG will
have sufficient resources to respond to competitors’ investments in stores
and pricing and promotional programmes.
July 31, 2021 21
Sheng Siong Group
FYE 31 Dec FY19A FY20A FY21E FY22E FY23E
Key Metrics
P/E (reported) (x) 22.3 16.1 20.2 23.1 23.2
Core P/E (x) 24.6 16.6 20.2 23.1 23.2
P/BV (x) 6.0 6.3 5.8 5.5 5.2
P/NTA (x) 6.0 6.3 5.8 5.5 5.2
Net dividend yield (%) 2.8 3.4 3.4 3.4 3.4
FCF yield (%) 6.1 9.6 2.0 6.9 1.2
EV/EBITDA (x) 16.2 11.3 13.7 14.9 15.3
EV/EBIT (x) 19.3 12.7 15.7 17.2 17.7
INCOME STATEMENT (SGD m)
Revenue 991.3 1,394.0 1,355.2 1,284.2 1,277.8
EBITDA 110.6 186.8 158.6 140.2 139.5
Depreciation (18.1) (20.7) (20.1) (19.0) (19.0)
Amortisation 0.0 0.0 0.0 0.0 0.0
EBIT 92.6 166.1 138.5 121.2 120.6
Net interest income /(exp) (0.7) (1.0) (1.0) (1.0) (1.0)
Associates & JV 0.0 0.0 0.0 0.0 0.0
Exceptionals 0.0 0.0 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 91.9 165.1 137.4 120.1 119.5
Income tax (16.2) (24.8) (20.7) (18.1) (18.0)
Minorities 0.0 0.0 0.0 0.0 0.0
Discontinued operations 0.0 0.0 0.0 0.0 0.0
Reported net profit 75.8 140.3 116.8 102.0 101.5
Core net profit 75.8 140.3 116.8 102.0 101.5
BALANCE SHEET (SGD m)
Cash & Short Term Investments 76.4 253.9 387.9 471.0 418.6
Accounts receivable 18.0 19.9 16.9 18.0 16.8
Inventory 82.2 77.9 77.5 70.4 76.7
Property, Plant & Equip (net) 295.3 291.6 285.9 292.5 299.3
Intangible assets 0.0 0.0 0.0 0.0 0.0
Investment in Associates & JVs 0.0 0.0 0.0 0.0 0.0
Other assets 60.9 48.7 48.7 48.7 48.7
Total assets 532.8 692.1 816.9 900.6 860.0
ST interest bearing debt 0.0 15.0 180.0 180.0 180.0
Accounts payable 140.8 208.1 130.6 191.7 128.9
LT interest bearing debt 0.0 15.0 15.0 15.0 15.0
Other liabilities 77.0 79.0 79.0 79.0 79.0
Total Liabilities 217.4 317.0 404.4 465.5 402.8
Shareholders Equity 313.3 372.4 409.7 432.4 454.5
Minority Interest 2.1 2.7 2.7 2.7 2.7
Total shareholder equity 315.4 375.1 412.5 435.1 457.2
Total liabilities and equity 532.8 692.1 816.9 900.6 860.0
CASH FLOW (SGD m)
Pretax profit 91.9 165.1 137.4 120.1 119.5
Depreciation & amortisation 18.1 20.7 20.1 19.0 19.0
Adj net interest (income)/exp 0.0 0.0 0.0 0.0 1.0
Change in working capital 24.6 65.2 (74.1) 67.1 (67.8)
Cash taxes paid (14.8) (11.1) (20.7) (18.1) (18.0)
Other operating cash flow 0.0 0.0 0.0 0.0 1.0
Cash flow from operations 119.7 239.9 62.8 188.2 54.7
Capex (6.9) (17.0) (14.4) (25.7) (25.7)
Free cash flow 112.8 222.9 48.4 162.5 29.0
Dividends paid (52.6) (79.7) (79.7) (79.7) (79.7)
Equity raised / (purchased) 0.0 0.0 0.0 0.0 0.0
Perpetual securities 0.0 0.0 0.0 0.0 1.0
Change in Debt 0.0 30.0 165.0 0.0 0.0
Other invest/financing cash flow (31.8) 5.9 0.0 0.0 0.0
Effect of exch rate changes (0.3) (1.9) 0.0 0.0 0.0
Net cash flow 28.1 177.2 133.7 82.9 (49.7)
July 31, 2021 22
Sheng Siong Group
FYE 31 Dec FY19A FY20A FY21E FY22E FY23E
Key Ratios
Growth ratios (%)
Revenue growth 11.3 40.6 (2.8) (5.2) (0.5)
EBITDA growth 10.4 68.9 (15.1) (11.6) (0.5)
EBIT growth 10.5 79.4 (16.7) (12.5) (0.5)
Pretax growth 8.5 79.6 (16.8) (12.6) (0.5)
Reported net profit growth 7.4 85.2 (16.8) (12.6) (0.5)
Core net profit growth 7.4 85.2 (16.8) (12.6) (0.5)
Profitability ratios (%)
EBITDA margin 11.2 13.4 11.7 10.9 10.9
EBIT margin 9.3 11.9 10.2 9.4 9.4
Pretax profit margin 9.3 11.8 10.1 9.4 9.4
Payout ratio 69.5 56.8 68.2 78.1 78.5
DuPont analysis
Net profit margin (%) 7.6 10.1 8.6 7.9 7.9
Revenue/Assets (x) 1.9 2.0 1.7 1.4 1.5
Assets/Equity (x) 1.7 1.9 2.0 2.1 1.9
ROAE (%) 25.1 40.9 29.9 24.2 22.9
ROAA (%) 15.6 22.9 15.5 11.9 11.5
Liquidity & Efficiency
Cash conversion cycle (22.8) (28.7) (28.7) (28.7) (28.7)
Days receivable outstanding 5.6 4.9 4.9 4.9 4.9
Days inventory outstanding 37.8 28.5 28.5 28.5 28.5
Days payables outstanding 66.2 62.0 62.0 62.0 62.0
Dividend cover (x) 1.4 1.8 1.5 1.3 1.3
Current ratio (x) 1.0 1.3 1.3 1.3 1.4
Leverage & Expense Analysis
Asset/Liability (x) 2.5 2.2 2.0 1.9 2.1
Net gearing (%) (incl perps) net cash net cash net cash net cash net cash
Net gearing (%) (excl. perps) net cash net cash net cash net cash net cash
Net interest cover (x) 137.0 nm 134.2 117.4 116.8
Debt/EBITDA (x) 0.0 0.2 1.2 1.4 1.4
Capex/revenue (%) 0.7 1.2 1.1 2.0 2.0
Net debt/ (net cash) (76.4) (223.9) (192.9) (276.0) (223.6)
Source: Company; Maybank
July 31, 2021 23
Sheng Siong Group
Research Offices
ECONOMICS
Suhaimi ILIAS Chief Economist Malaysia | Philippines | Global (603) 2297 8682 [email protected]
CHUA Hak Bin Regional Thematic Macroeconomist (65) 6231 5830 [email protected]
LEE Ju Ye Singapore | Thailand | Indonesia (65) 6231 5844 [email protected]
Linda LIU Singapore | Vietnam | Cambodia | Myanmar | Laos (65) 6231 5847 [email protected]
Dr Zamros DZULKAFLI (603) 2082 6818 [email protected]
Ramesh LANKANATHAN (603) 2297 8685 [email protected]
FX
Saktiandi SUPAAT Head of FX Research (65) 6320 1379 [email protected]
Christopher WONG (65) 6320 1347 [email protected]
TAN Yanxi (65) 6320 1378 [email protected]
Fiona LIM (65) 6320 1374 [email protected]
STRATEGY
Anand PATHMAKANTHAN
ASEAN (603) 2297 8783 [email protected]
FIXED INCOME
Winson PHOON, ACA (65) 6340 1079 [email protected]
SE THO Mun Yi (603) 2074 7606 [email protected]
REGIONAL EQUITIES
Anand PATHMAKANTHAN Head of Regional Equity Research (603) 2297 8783 [email protected]
WONG Chew Hann, CA Head of ASEAN Equity Research (603) 2297 8686 [email protected]
ONG Seng Yeow Research, Technology & Innovation (65) 6231 5839 [email protected]
MALAYSIA
Anand PATHMAKANTHAN Head of Research (603) 2297 8783 [email protected] • Strategy
WONG Chew Hann (603) 2297 8686
[email protected] • Non-Bank Financials (stock exchange) • Construction & Infrastructure
Desmond CH’NG, BFP, FCA (603) 2297 8680 [email protected] • Banking & Finance
LIAW Thong Jung (603) 2297 8688 [email protected] • Oil & Gas Services- Regional • Automotive
ONG Chee Ting, CA (603) 2297 8678 [email protected] • Plantations - Regional
YIN Shao Yang, CPA (603) 2297 8916 [email protected] • Gaming – Regional • Media • Aviation • Non-Bank Financials
TAN Chi Wei, CFA (603) 2297 8690 [email protected] • Power • Telcos
WONG Wei Sum, CFA (603) 2297 8679 [email protected] • Property • Glove
Kevin WONG (603) 2082 6824 [email protected] • REITs • Technology
Jade TAM (603) 2297 8687 [email protected] • Consumer Staples & Discretionary
Fahmi FARID (603) 2297 8676 [email protected] • Software
Syifaa’ Nur FARAH (603) 2297 8675 [email protected] • Construction
Arvind JAYARATNAM (603) 2297 8692 [email protected] • Petrochemicals
TEE Sze Chiah Head of Retail Research (603) 2082 6858 [email protected]
Nik Ihsan RAJA ABDULLAH, MSTA, CFTe (603) 2297 8694 [email protected] • Chartist
Amirah AZMI (603) 2082 8769 [email protected] • Retail Research
SINGAPORE
Thilan WICKRAMASINGHE Head of Research (65) 6231 5840 [email protected] • Banking & Finance - Regional • Consumer
CHUA Su Tye (65) 6231 5842 [email protected] • REITs - Regional
LAI Gene Lih, CFA (65) 6231 5832 [email protected] • Technology • Healthcare
Kareen CHAN (65) 6231 5926 [email protected] • Transport • Telcos • Consumer
Eric ONG (65) 6231 5924 [email protected] • SMIDs
Matthew SHIM (65) 6231 5929 [email protected]
• Retail Research
PHILIPPINES
Jacqui de JESUS Head of Research (63) 2 8849 8840 [email protected] • Strategy • Conglomerates
Rachelleen RODRIGUEZ, CFA (63) 2 8849 8843 [email protected] • Banking & Finance • Transport • Telcos
Benedict CLEMENTE (63) 2 8849 8846 [email protected] • Utilities
Daphne SZE (63) 2 8849 8847 [email protected] • Consumer
VIETNAM
Quan Trong Thanh Head of Research (84 28) 44 555 888 ext 8184 [email protected] • Banks
Hoang Huy, CFA (84 28) 44 555 888 ext 8181 [email protected] • Strategy • Technology
Le Nguyen Nhat Chuyen (84 28) 44 555 888 ext 8082 [email protected] • Oil & Gas
Nguyen Thi Sony Tra Mi (84 28) 44 555 888 ext 8084 [email protected] • Consumer
Tyler Manh Dung Nguyen (84 28) 44 555 888 ext 8085 [email protected] • Utilities • Property
Tran Thi Thu Thao (84 28) 44 555 888 ext 8180 [email protected] • Industrials
Nguyen Thi Ngan Tuyen Head of Retail Research (84 28) 44 555 888 ext 8081 [email protected] • Retail Research
Nguyen Thanh Lam (84 28) 44 555 888 ext 8086 [email protected] • Technical Analysis
INDIA
Jigar SHAH Head of Research (91) 22 4223 2632 [email protected] • Strategy • Oil & Gas • Automobile • Cement
Neerav DALAL (91) 22 4223 2606 [email protected] • Software Technology • Telcos
Vikram RAMALINGAM (91) 22 4223 2607 [email protected] • Automobile • Media
INDONESIA
Rahmi MARINA (62) 21 8066 8689 [email protected] • Banking & Finance
Willy GOUTAMA (62) 21 8066 8500 [email protected] • Consumer
Farah OKTAVIANI (62) 21 8066 8691 [email protected] • Construction
THAILAND
Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] • Strategy • Consumer • Materials • Services
Jesada TECHAHUSDIN, CFA (66) 2658 6300 ext 1395 [email protected] • Banking & Finance
Kaushal LADHA, CFA (66) 2658 6300 ext 1392 [email protected] • Oil & Gas – Regional • Petrochemicals - Regional • Utilities
Vanida GEISLER, CPA (66) 2658 6300 ext 1394 [email protected] • Property • REITs
Yuwanee PROMMAPORN (66) 2658 6300 ext 1393 Yuwanee.P @maybank-ke.co.th • Services • Healthcare
Ekachai TARAPORNTIP Head of Retail Research (66) 2658 5000 ext 1530 [email protected]
Surachai PRAMUALCHAROENKIT (66) 2658 5000 ext 1470 [email protected] • Auto • Conmat • Contractor • Steel
Suttatip PEERASUB (66) 2658 5000 ext 1430 [email protected] • Food & Beverage • Commerce
Jaroonpan WATTANAWONG (66) 2658 5000 ext 1404 [email protected] • Transportation • Small cap
Thanatphat SUKSRICHAVALIT (66) 2658 5000 ext 1401 [email protected]
• Media • Electronics
Wijit ARAYAPISIT (66) 2658 5000 ext 1450 [email protected] • Strategist
Theerasate PROMPONG (66) 2658 5000 ext 1400 [email protected] • Equity Portfolio Strategist
Apiwat TAVESIRIVATE (66) 2658 5000 ext 1310 [email protected] • Chartist and TFEX
July 31, 2021 24
Sheng Siong Group
APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ fr om fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies d iscussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these f orward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solic it business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent permitted by law.
This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for t he actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this repor t.
Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.
Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Securities (Thailand) Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research products of MBKET Institutional and Retail Research departments may differ in either recommendation or target price, or both. MBKET reserves the rights to disseminate MBKET Retail Research reports to institutional investors who have requested to receive it. If you are an authorised recipient, you hereby tacitly acknowledge that the research reports from MBKET Retail Research are first pr oduced in Thai and there is a time lag in the release of the translated English version.
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective o f Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appea ring in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness of the assessment result.
US This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security mentioned within must do so with: Maybank Kim Eng Securities USA Inc. 400 Park Avenue, 11th Floor, New York, New York 10022, 1-(212) 688-8886 and not with, the issuer of this report.
July 31, 2021 25
Sheng Siong Group
Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to he rein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Singapore: As of 31 July 2021, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report. Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report. Hong Kong: As of 31 July 2021, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report. India: As of 31 July 2021, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst o r their associate / relative does not hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the sub ject companies except as otherwise disclosed in the research report.
In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or third party in connection wi th the research report on any account what so ever except as otherwise disclosed in the research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.
OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to soph isticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (including dividends)
HOLD Return is expected to be between 0% to 10% in the next 12 months (including dividends)
SELL Return is expected to be below 0% in the next 12 months (including dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Conduct Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such li nks is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.
DISCLOSURES
Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by Maybank KERPL (Co. Reg No 198700034E) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Maybank Kim Eng Securities (“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the Financial Services Authority (Indonesia). Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Conduct Authority.
July 31, 2021 26
Sheng Siong Group
Malaysia Maybank Investment Bank Berhad
(A Participating Organisation of
Bursa Malaysia Securities Berhad)
33rd Floor, Menara Maybank,
100 Jalan Tun Perak,
50050 Kuala Lumpur
Tel: (603) 2059 1888;
Fax: (603) 2078 4194
Singapore Maybank Kim Eng Securities Pte Ltd
Maybank Kim Eng Research Pte Ltd
50 North Canal Road
Singapore 059304
Tel: (65) 6336 9090
London Maybank Kim Eng Securities
(London) Ltd
PNB House
77 Queen Victoria Street
London EC4V 4AY, UK
Tel: (44) 20 7332 0221
Fax: (44) 20 7332 0302
New York Maybank Kim Eng Securities USA
Inc
400 Park Avenue, 11th Floor
New York, New York 10022,
U.S.A.
Tel: (212) 688 8886
Fax: (212) 688 3500
Stockbroking Business:
Level 8, Tower C, Dataran Maybank,
No.1, Jalan Maarof
59000 Kuala Lumpur
Tel: (603) 2297 8888
Fax: (603) 2282 5136
Hong Kong Kim Eng Securities (HK) Ltd
28/F, Lee Garden Three,
1 Sunning Road, Causeway Bay,
Hong Kong
Tel: (852) 2268 0800
Fax: (852) 2877 0104
Indonesia PT Maybank Kim Eng Securities
Sentral Senayan III, 22nd Floor
Jl. Asia Afrika No. 8
Gelora Bung Karno, Senayan
Jakarta 10270, Indonesia
Tel: (62) 21 2557 1188
Fax: (62) 21 2557 1189
India Kim Eng Securities India Pvt Ltd
1101, 11th floor, A Wing, Kanakia
Wall Street, Chakala, Andheri -
Kurla Road, Andheri East,
Mumbai City - 400 093, India
Tel: (91) 22 6623 2600
Fax: (91) 22 6623 2604
Philippines Maybank ATR Kim Eng Securities Inc.
17/F, Tower One & Exchange Plaza
Ayala Triangle, Ayala Avenue
Makati City, Philippines 1200
Tel: (63) 2 8849 8888
Fax: (63) 2 8848 5738
Thailand Maybank Kim Eng Securities
(Thailand) Public Company Limited
999/9 The Offices at Central World,
20th - 21st Floor,
Rama 1 Road Pathumwan,
Bangkok 10330, Thailand
Tel: (66) 2 658 6817 (sales)
Tel: (66) 2 658 6801 (research)
Vietnam Maybank Kim Eng Securities Limited
4A-15+16 Floor Vincom Center Dong
Khoi, 72 Le Thanh Ton St. District 1
Ho Chi Minh City, Vietnam
Tel : (84) 844 555 888
Fax : (84) 8 38 271 030
Saudi Arabia In association with
Anfaal Capital
Ground Floor, KANOO Building
No.1 - Al-Faisaliyah,Madina Road,
P.O.Box 126575 Jeddah 21352
Kingdom of Saudi Arabia
Tel: (966) 920023423
South Asia Sales Trading Kevin Foy
Regional Head Sales Trading
Tel: (65) 6636-3620
US Toll Free: 1-866-406-7447
North Asia Sales Trading Andrew Lee
Tel: (852) 2268 0283
US Toll Free: 1 877 837 7635
Indonesia Iwan Atmadjaja [email protected] (62) 21 8066 8555
London Greg Smith [email protected] Tel: (44) 207-332-0221
New York James Lynch [email protected] Tel: (212) 688 8886
India Sanjay Makhija [email protected] Tel: (91)-22-6623-2629
Philippines Keith Roy [email protected] Tel: (63) 2 848-5288
www.maybank-ke.com | www.maybank-keresearch.com
Top Related