Stock Name: Sheng Siong
Company Name: SHENG SIONG GROUP LTD
CIMB in a May 25 research report says: "We think Sheng Siong is behind the recent price war among supermarkets in a bid to turn the screws on its competitors and strengthen its competitive position. "Sheng Siong should emerge from this bout of competitive pressure stronger than its rivals, regardless of who is the aggressor. Sheng Siong may be sacrificing margins to strengthen its market position. As such, FY2012 margins may not return to FY2011’s lofty 22% levels. "Management has confirmed that it will be distributing gains from the sale of its old warehouse as dividends. It also intends to stick to its 90% dividend policy beyond FY13. We believe margin pressure from the price war is likely to ease up in 2Q. Target price of 49 cents (18x CY13 P/E, 20% disc. to Dairy Farm) and estimates. MAINTAIN OUTPERFORM."
Company Name: SHENG SIONG GROUP LTD
| Research House: CIMB | Price Call: BUY | Target Price: 0.49 |
CIMB in a May 25 research report says: "We think Sheng Siong is behind the recent price war among supermarkets in a bid to turn the screws on its competitors and strengthen its competitive position. "Sheng Siong should emerge from this bout of competitive pressure stronger than its rivals, regardless of who is the aggressor. Sheng Siong may be sacrificing margins to strengthen its market position. As such, FY2012 margins may not return to FY2011’s lofty 22% levels. "Management has confirmed that it will be distributing gains from the sale of its old warehouse as dividends. It also intends to stick to its 90% dividend policy beyond FY13. We believe margin pressure from the price war is likely to ease up in 2Q. Target price of 49 cents (18x CY13 P/E, 20% disc. to Dairy Farm) and estimates. MAINTAIN OUTPERFORM."
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