My Personal Analysis of Sheng Siong Group Ltd

Sheng Siong FY2021 Financial Results

Sheng Siong FY2021 Financial Results

Sheng Siong has released their FY2021 Financial Results on 23rd February 2022. I used to own Sheng Siong but have sold it away back in 2016.

The Group which operate a series of supermarkets has a total of 64 stores in Singapore. The Group opened 1 new retail store in FY2021 and will open 2 new stores in 1H FY2022.

How has Sheng Siong fare so far?

Let us take a look at its 2H2021 financial results and full year financial results below.

Sheng Siong 2H2021 Financial Results

Revenue, Gross Profit and Operating expenses have all improved.

2H 2021
(S$’mil)
2H 2020
(S$’mil)
Change
Revenue 688.1 646.6 6.4%
Gross Profit 200.8 175.5 14.4%
Gross profit margin 29.2% 27.1% 2.1ppts
Operating expenses (123.5) (120.8) 22.4%
Profit before tax 81.2 76.0 7.5%

Sheng Siong Full Year FY2021 Financial Results

In FY2021, Revenue declined marginally by 1.7% to S$1,370 million. This was due to the high base for FY2020 mainly driven by elevated demand arising from COVID-19.

Gross profit increased by 3.0% to S$393.3 million as margin improved to 28.7% in FY2021 following favourable sales mix.

FY2021
(S$’mil)
FY2020
(S$’mil)
Change
Gross Revenue 1,369.8 1,394.0 (1.7)%
Gross Profit 393.3 381.9 3.0%
Gross profit margin 28.7% 27.4% 1.3ppts
Operating expenses (243.2) (257.0) (5.4)%
Profit before tax 161.0 165.1 (2.5)%

Current Dividend Yield

Sheng Siong has proposed a final dividend of S$0.031 per share. This makes a total dividends of S$0.062 per share for FY2021.

Based on the current closing price of S$1.52, this translate to a current dividend yield of 4.08%.

Sheng Siong Dividend Distribution History

As you can see from the chart below. Sheng Siong has a consistent dividend payout ratio of 70%. The Group was also able to increase its dividend in FY2020 and FY2021.

Perhaps the COVID-19 pandemic has caused people to cook more at home and thus shop for more groceries?

Summary of Sheng Siong FY2021 Financial Results

In summary, Sheng Siong is a cash cow with cash of S$246.6 million as at 31 December 2021. Sheng Siong has cash of S$253.9 million a year ago.

In the retail business, I believe the gross profit margin is exceptionally important. Gross Profit Margin is the amount of money left over from selling the product after subtracting the cost of goods sold.

As you can see from the chart below, Sheng Siong was able to grow both its Gross Profit and Gross Profit Margin over the years.

In summary

  • Revenue declined slightly by 1.7% but this was because of higher base in FY2020 driven by higher demand due to COVID-19.
  • Gross profit increased by 3.0% to S$393.3 million as margin improved to 28.7%
    in FY2021 following favourable sales mix.
  • Healthy cash on hand of S$246.6 million.
  • Increasing number of stores year-on-year.
  • Attractive current dividend yield of 4.08%.
  • Increasing gross profit and gross profit margin year-on-year.

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