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The Good And Bad That Investors Should Know About Sheng Siong Group Ltd’s Latest Results

Sheng Siong Group Ltd (SGX: OV8) is one of the largest supermarket chains in Singapore, with a network of 47 stores primarily located in the heartlands of the island.

The company recently announced its 2017 fourth quarter (4Q2017) financial results. There are both positive and negative takeaways that investors may want to know about. But first, let’s run through the company’s numbers.

The results

Source: Sheng Siong’s 2017 fourth quarter earnings release

Overall, Sheng Siong’s 4Q2017 and FY2017 results were better than the same period last year.

The positives

First of all, full-year revenue was up by 4.2% year-on-year, mainly due to opening of new stores and same store sales growth, partially offset by closure of stores.

Secondly, full-year gross profit grew 6.2% year-on-year, mainly on the back of lower input costs. This came about largely due to better pricing, higher rebates and volume discounts.

Moreover, the company’s balance sheet remained strong with zero debt and S$73.4 million in cash. Such a strong balance sheet puts Sheng Siong in a good position to further expand its store count.

The negative

Sheng Siong expects competition in the supermarket industry to remain keen, particularly with the influx of online retailers. Also, some of the old stores in mature estates have seen decreasing same store sales and the supermarket chain expects re-fitting of these stores to cause temporary loss of sales.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.