Sheng Siong Went Against Asset Light Business Model

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An asset light business model lowers operating costs and risks. However Sheng Siong has went against the odds. Sheng Siong announced the acquisition of a property in Bedok Town Centre for S$53 million. The property is an existing store that Sheng Siong has been operating for 10 years.

I can see the rationale why Sheng Siong acquires the property. The 30.6k sf store is conveniently located within walking distance from Bedok Mall, Bedok Bus Interchange and Bedok MRT Station which enjoys excellent shopper traffic. According to analyst reports by CIMB, the store contributes 5 to 10% of Sheng Siong’s revenue. Thus, this is a pretty important store to Sheng Siong.

Including the Junction 9 store which is opening in 2Q16, Sheng Siong will now own four out of the 41 stores that the group operates.

Summary of August 2015 Transactions

Strait Times Index August 2015

As my mindset shifted from being a value investor to an income investor, I made a drastic decision to update my portfolio. Given the current market turmoil, it was certainly a wrong timing to sell but I knew that some of my holdings are bought purely on speculation few years ago and if I did not sell now, losses will compound. I sold Amara Holdings, Boustead Projects, K1 Ventures and Second Chance Properties Ltd. I am not saying these few stocks are not good but it is just that I did not understand or did my home work on them prior to buying them. E.g. I bought Second Chance because of its high yield but I did not study in depth into its fundamentals. Read More