Sheng Siong Group (OV8) Q2 2024 earnings summary

Executive summary

• Revenue for 1H FY2024 increased by 3.4% year-over-year to S$714.2 million, supported by a longer sales period before Lunar New Year and new store openings.

• Net profit rose 6.8% year-over-year to S$70.0 million, with EPS up 6.9% to 4.65 cents and net margin improving to 9.8%.

• Retail network expanded with four new stores year-to-date, totaling 73 in Singapore and 6 in China, with further expansion planned.

• Interim dividend of 3.20 Singapore cents per share declared, payable 30 August 2024.

• Gross profit margin improved to 30.1% from 29.7% due to a better sales mix.

Financial highlights

• Gross profit grew 4.8% year-over-year to S$215.0 million, with gross margin at 30.1%.

• Operating profit rose 6.4% to S$80.93 million; profit before tax up 7.0% to S$85.06 million.

• Other income surged 45.4% to S$7.3 million, mainly from higher government grants and supplier advertising.

• Cash generated from operations increased to S$93.0 million, up S$15.2 million year-over-year.

• Interim dividend of 3.20 cents per share declared.

Outlook and guidance

• Inflationary pressures and higher living costs are expected to shift consumer spending toward groceries and fresh food.

• Retail sales softened in Q2 due to overseas travel but are expected to improve in 2H 2024.

• Plans to expand further with seven new store tenders expected in 2H FY2024, leveraging new HDB shop tenders.

• Ongoing focus on operational efficiency, automation, sales mix improvement, and supply chain diversification.

• China operations remain profitable, with a sixth store opened in June 2024.