Sheng Siong Group (OV8) H2 2023 earnings summary

Executive summary

• FY2023 revenue rose 2.1% YoY to S$1,367.7m and net profit increased 0.3% to S$134.0m; gross margin expanded to 30.0%.

• New stores contributed 2.5% to FY sales growth, while comparable-store sales were flat; the Singapore and China store network expanded to 69 and 5 locations, respectively.

Financial highlights

• FY2023 gross profit rose 4.3% to S$410.5m; gross margin was 30.0%, up from 29.4%, reflecting sales mix changes and efforts to cover higher staff and utility costs.

• Results from operating activities fell 4.2% to S$155.4m; profit before tax was S$163.1m, essentially flat YoY, and net profit rose 0.3% to S$134.0m.

• 2H FY2023 revenue increased 2.2% to S$677.2m and profit after tax rose 3.5% to S$68.5m, supported mainly by higher finance income.

• FY2023 other income declined 17.2% to S$14.3m, mainly reflecting lower miscellaneous income and supplier rebates; government grants increased, including a Progressive Wage Credit Scheme grant accrued in FY2023.

Outlook and guidance

• Two Singapore stores secured in early 2024 are expected to open by 2Q; six additional supermarket stores are expected to be tendered in 2024, alongside a planned sixth China store in 2Q.

• Margin improvement priorities include refining sales mix and strengthening operational efficiency and productivity amid persistent competition and higher operating costs.