Sheng Siong Group
Work From Home
Sheng Siong wass incorporated on Nov-2010 and listed in SGX on Jul-2011. The company operates groceries or supermarket chains across Singapore and China supplying fresh & dry produce and household products. Distribution, food-processing and warehousing are based in the company headquarter at Mandai Link.
SSG first entered Kunming China market opening her first store in 4Q17. The company now have four stores in Kunming around residential districts. Major competitors, Tesco, Carrefour and Walmart are typically located around financial districts.
Early years growth was driven by expanding store outlets & retail area across the island; boosting revenue per unit retail area and improving productivity to optimising gross & operating margin.
In 2017, the company ventured into China, opening her first store in 4Q17. There are currently four stores in Kunming indicating a measured pace of expansion.
Discipline in managing cost & expenses enabled SSG to improve operating margin from 3.3% in 2008 to 8.4% in 2019. Covid-19 circuit-breaker or lockdown forced workers to work-from-home from 2020 boosting revenue up 41% and OM increasing to 9.0%.
Revenue fell 2% in 2021 but GM improved further to 11.0%. According to management, it was due to sales-mix and efficiency. Inflation or price increase is likely another reason for the margin improvement.
China operation is profitable and should bode well for the firm's long-term growth ambition.
The sharp revenue jump in 2020 due to Covid-19 is an anomaly. With Singapore shift towards 'living-with-Covid' and re-opening of air and land borders; workers are returning to workplaces. This imply more work-related lunch or dinner activities and lesser home activities.
Inflationary pressure will curb consumer spending and increase price sensitivity.
Rising rental and energy cost will be a challenge for the company in the medium term.
China zero-policy may benefit business in the short term.