Here Are 2 Developments Sheng Siong Group Ltd Hopes Can Grow Its Business

Supermarket retailer Sheng Siong Group Ltd (SGX: OV8) is likely to be a familiar company for many Singaporeans given that it currently has 39 of its namesake stores scattered across the island.

It is also a company that has a steady – albeit unspectacular – track record of growth. From 2010 to 2015, Sheng Siong’s revenue had stepped up by 4% per year from S$628 million to S$764 million. Meanwhile, its profit had increased by 5.9% annually from S$42.6 million to S$56.8 million. The first-quarter of 2016 saw Sheng Siong’s growth accelerate – revenue was up by 5.1% to S$208 million while profit surged by 16.8% to S$16.4 million.

These numbers have helped push Sheng Siong’s share price 162% higher since the close of its first ever day of trading on 17 August 2011.

But that is then and this is now. How might Sheng Siong continue growing its business? There have been two recent developments that the company hopes can deliver future growth.

The first is an upgrade to the company’s payments system in its stores.

In May this year,  Sheng Siong had implemented Glory’s CashInfinity full self-payments system in its stores islandwide. What’s interesting about the system is that it can handle cash payments and dispense cash-change automatically and accurately.

The introduction of the CashInfinity system could help Sheng Siong address manpower-related challenges and improve the shopping experience of its customers.

The next development is that Sheng Siong has finally gotten the necessary regulatory approvals in May to open its first supermarket in China. Sheng Siong’s Chinese business will be a joint venture with the company currently holding a 60% stake.

30% of the joint venture is owned by China-based sauces and condiments maker Kunming LuChen Group while the remaining 10% is held by Sheng Siong excecutive director Tan Ling San.

China’s economic growth has slowed down in recent years, but had still expanded by 6.7% in the first-quarter of 2016. Meanwhile, the country is also in the midst of a transformation of its economy from an export-led model into a consumption-led one.

Only time will tell if Sheng Siong’s Chinese adventure can succeed. It’s worth noting too that the US-based supermarket giant Walmart had tried and failed to gain traction in its Chinese expansion.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat does not own shares in any companies mentioned.