DMG upgrades Sheng Siong to buy

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

Research House: DMG

Price Call: BUY

Target Price: 0.51

DMG & Partners upgraded supermarket chain operator Sheng Siong Group to buy from neutral and raised its target price to $0.51 from $0.45, citing an expected strong dividend payout.

At 9:33 a.m., shares of Sheng Siong were up 2.3% at $0.44, and have remained unchanged so far this year, compared to the FT Small Cap Index's 14.4% gain.

The brokerage said it expects Sheng Siong to keep dividend payout at 90% versus its previous estimate of 50%, given it has no large capital expenditure plans in the near term and a positive working capital cycle.

DMG also raised its 2012-2013 earnings estimates for Sheng Siong by about 0.8% to 1.5%, as two new stores are slated to open this month, increasing its gross floor area by 10% this year.