MENU

3 Things Investors Should Know about Sheng Siong Group Ltd

Sheng Siong Group Ltd (SGX: OV8) is one of the largest supermarket chains in Singapore.

The company currently has a network of 41 stores that are primarily located in the heartlands of the island. The company was founded in 1985 and listed in August 2011.

Here are three things about the company that may interest investors.

1. Growing revenue and profits

Sheng Siong has displayed solid growth in both its top-line and bottom-line in the last five years. Its revenue has grown from S$578.4 million in 2011 to S$764.4 million in 2015 – that’s a compound annual growth rate of 7.2%. Net profit grew even faster from S$27.3 million to S$56.8 million, equating to annualised growth of 20.1%.

The supermarket company has continued growing in 2016. A 5.3% increase in revenue in the second-quarter of 2016 had translated into an 11.3% climb in profit.

2. A history of growing dividends

Sheng Siong has continuously paid an annual dividend since its listing in 2011. Moreover, those dividends have increased in each year and have stepped up from 1.77 cents in 2011 to 3.50 cents in 2015.

At Sheng Siong’s latest share price of $1.06, the company has a dividend yield of 3.3%. This is marginally higher than the 3.25% yield that the SPDR STI ETF (SGX: ES3) has right now; the SPDR STI ETF is an exchange-traded fund that tracks Singapore’s market barometer, the Straits Times Index (SGX: ^STI).

3. An owner-operator company

According to Sheng Siong’s 2015 annual report, the Lim brothers – Lim Hock Eng, Lim Hock Chee, and Lim Hock Leng – collectively control 52.63% of the company’s shares (as of 18 March 2016).

The Lim brothers happen to be Sheng Siong’s founders and even today, they continue holding important leadership roles. Lim Hock Eng is the executive chairman, Lim Hock Chee is the chief executive, and Lim Hock Leng is a managing director.

As the Lim brothers are both owners and operators of Sheng Siong, there seems to be at least some alignment of interests between them and minority shareholders of the company.

That said, alignment of interest can be somewhat of a judgement call and there’s likely no right or wrong answer. But, there’s one thing we can be certain: Sheng Siong’s minority shareholders have done very well. Since its listing, Sheng Siong’s share price has climbed by 213%.

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.