Sheng Siong Group Ltd (SGX: OV8) is one of the largest supermarket chains in Singapore. The company’s network of 48 stores are primarily located in the heartlands of our island nation. The company was established in 1985 and listed in 2011.
One of the things that I like to do when analysing a company is to study its track record. The past is no guarantee of the future. But historical information is the most reliable thing that we can use as our basis to forecast what lies ahead.
And this brings me to the main purpose of this article, which is to have a quick overview of Sheng Siong’s historical business growth.
A record of steady growth
The table below is a snapshot of Sheng Siong’s important financial metrics from 2012 to 2017:
Source: Sheng Siong’s annual reports
Here are a few points worth noting:
1. Firstly, the company’s revenue increased from S$637.3 million in 2012 to S$829.9 million in 2017. This translates to a CAGR (compound average growth rate) of a respectable 5.4%.
2. Secondly, the CAGR of its gross profit for the same period has been stronger, at 9.1%, with the increase from S$140.9 million to S$217.4 million.
3. Thirdly, Sheng Siong’s gross profit increased at a faster pace compared to revenue as a result of the expansion of the company’s gross profit margin from 22.1% in 2012 to 26.2% in 2017. This indicates that Sheng Siong has improved its cost management over the years.
4. Lastly, the company’s EPS (earnings per share) has increased at 9.0% annually during the period under observation, climbing from 3.01 cents to 4.64 cents.
A Foolish conclusion
In sum, I think Sheng Siong has delivered a commendable track record of business growth over the past few years. The company has managed to grow its revenue, gross profit, and earnings per share at decent rates.
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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. The Motley Fool Singapore has a recommendation on Sheng Siong Group.