Thursday, August 9, 2012

Enormous growth for Sheng Shiong Group

Introduction: Sheng Shiong Group is one of the largest supermarket chains in Singapore. Sheng Shiong is over S$628.4 million in revenue for year 2010 and has reported a net profit of S$7.0 million till the Q2 which ended on June 30. They have stores located in the retail locations of Singapore and are designed to provide wide shopping options to their customers. To support their retail operations they have in-house systems such as warehouse facilities, food processing and distribution network. Sheng Shiong manages 23 markets which include one hypermarket, twenty two Supermarkets and three wet market stalls. It is an investment holding company.
Current Scenario: Sheng Shiong has an established household name in Singapore due to its long history and reputation. It has strong cash flow. In order to improve operational efficiency they have set up new distribution center. Sheng Shiong started trading in the Singapore exchange in August 2011 with a huge profit from IPO. They now expect a recurring net profit of 8.5% in the period of 2012-2014. There is an increase of 8.9% in the Singapore’s gross domestic product which is from S$208.8 billion in 2005 to S$319.5 in 2010.
The major discussion in Sheng Shiong group is about the dividend because 90% of net profits for 2011-2012 have been distributed. Total number of outlets as of June 30, 2012 is 27. 368.00sqft is the retail area which increased to 9.8% by July 2012.
Future Prospects: Sheng Shiong is planning to expand its outlets. They would increase the number of stores to get more profits and enhance their infrastructure. Also are planning to open the stores in Singapore and overseas as well. Its 543,090 sq.ft warehouse at Mandai link is fully equipped to serve the customers in terms of processing and transporting large goods. It helps in reducing manpower and enables the automation of most of the work. Sheng Shiong is planning to concentrate more on quality and then work on increasing their productivity. This would in return gain profits. For this they have upgraded the network systems and other resources which would provide economic sales.
It plans to set up minimum of 50 stores in Malaysia in the future.
Conclusion: Sheng Shiong is heading in the right direction and it would be an ideal move to invest in them. With the increase of stores and upgrade of new technology the functioning is smooth. Sheng Shiong plans to increase their product list. They are now planning to go for more of fresh products and also have a more selection and types of household names and products. Concentrate more on the products which gain more profit and would increase sales mix of higher margin products. Sheng Shiong plans to launch in ecommerce platform to provide more visibility to their products and also to have increased customer base.
It is predicted that Singapore’s grocery market would increase by 4-5% in the year 2011-2012. The local supermarket industry is worth S$4.3 billion. The current share value is $0.46 which is better than the last two days. Share price may exceed by 10% over the next 12 months

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