IIFL starts Sheng Siong at buy

Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD

Research House: IIFL

Price Call: BUY

Target Price: 0.61

IIFL has initiated coverage of Singapore’s supermarket operator Sheng Siong (SHEN.SI) with a buy rating and a target price of $0.61.

Sheng Siong is the third-largest supermarket retailer in Singapore after NTUC and Dairy Farm (DAIR.SI), with 27 outlets, and will accelerate the pace of new store additions over the next 3-4 years, IIFL said.

“We have a positive outlook on Sheng Siong, due to its recession-proof business, strong franchise, superior profitability, and strong growth prospects,” said IIFL in a statement.

The brokerage said it expects Sheng Siong to deliver an average annual core net profit growth of 23% for 2011-2013, on the back of new store openings and higher margins.

At 2:20 a.m., shares of Sheng Siong were 1.1% higher at $0.465, and have risen about 37% since its market debut on last month.