From pork seller to CEO of Sheng Siong

From pork seller to CEO. Nope, this is not the plot of the latest Mediacorp drama nor the story of SG Wealth Builder. Instead, it is the real success story of Mr Lim Hock Chee, CEO of Sheng Siong. From a humble outlet at Ang Mo Kio, Mr Lim grew Sheng Siong to the third largest supermarket operator in Singapore and eventually got it listed in 2011.

Since its debut at IPO price of $0.33, the share price had been surging in recent years and even crossed the $1.00 in 2016. Given the bullish form, should investors enter this counter now or is it a value trap?

2017 proved to be another great year for Sheng Siong as the home-grown supermarket operator achieved revenue of $629 million and net profit of $52.8 million for nine months, an increase of 5% and 11.8% respectively year-on-year. The results were certainly impressive given the current weak retail sentiments. But as shared in my previous articles, I would not invest in this counter due to the following factors highlighted in this article.

Sheng Siong

Before reading this review, please check out the articles I have written on Sheng Siong. They would contain my research and insights on this counter. Take note that they are protected articles. To access them, please sign up as member of SG Wealth Builder.

  1. Sheng Siong share price inflated?
  2. Is Sheng Siong’s dividend policy sustainable?
  3. Explosive form of Sheng Siong shares
  4. Sheng Siong’s share price is rock solid
  5. Sheng Siong Group

Lack of Investment moat

Sheng Siong’s closest rivals are NTUC Fairprice and Dairy Farm which operates the Cold Storage and Giant outlets. Among the trio, Sheng Siong is the smallest operator. Currently, NTUC Fairprice has 130 outlets, Dairy Farm has 78 supermarket outlets and Sheng Siong has 43 outlets. Looking at the current situation, Sheng Siong’s competitors are leading the race and Sheng Siong has quite a fair bit of gap to close on its opponents. In view of this, Sheng Siong lacks the investment moat to ward off competition from NTUC Fairprice and Dairy Farm.

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Magically yours,

SG Wealth Builder

 

Updated: April 5, 2018 — 8:18 am

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