Sheng Siong Reduce Manpower Woes with Self Payment Kiosk

sheng-siong-self-payment

Sheng Siong is one of my favorite company in my stock portfolio. It is such a fantastic growth company with zero debt. See how the stock continues the uptrend over the 5 year period. For Sheng Siong who is expanding aggressively by opening more and more stores in Singapore, hiring manpower for new stores is a continued challenge due to the current labour crunch in the market. This is also a common challenge among Jumbo and Breadtalk businesses where the nature of the business in the service industry is labour intensive.

heng-siong-stock-chart-18-oct-2016

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Sheng Siong Net Profit Grew 16.8% for 1Q2016

Sheng Siong Show

On 27th April 2016. Sheng Siong announced its 1Q2016 financial results. Net Profit grew 16.8% due to higher revenue and higher other income. Sheng Siong’s other income comes from Rental income (leasing of retail space to external parties), sale of scrap materials and government grants (wage credit and special employment credit schemes). Government grants for 1Q2016 was S$2,252,000 as compared to S$817,000. This is a significant increase.

Administrative expenses increased by S$1.6 million in 1Q2016 compared with 1Q2015 due to higher staff costs. More headcount are required to operate the new stores as highlighted below.

Cash flow remains strong at S$113.9 million as at 31 March 2016.

Financial Highlights

(S$ ‘million)

1Q20161Q2015Change
Revenue208.5198.45.1%
Gross Profit51.048.55.2%
Gross Profit Margin24.5%24.4%0.1 percentage points
Other Income3.82.270.8%
Net Profit16.414.116.8%
Net Profit Margin7.0%7.1%0.8 percentage points
EPS (cents)1.090.9416.0%

Debt

Sheng Siong is still debt free.

New Stores

As of 1Q2016, Sheng Siong has 39 stores as compared to 35 stores in 1Q2015. 4 more stores are expected to open in 2Q2016.

They are

  1. Yishun Junction 9
  2. Circuit Road
  3. Upper Boon Keng Road
  4. Fernvale Street, Sengkang

The subsidiary in Kunming China, has signed a lease for their first store which is approximately 54,000 sq. ft and the supermarket should open in 4Q2016.