I won’t say Sheng Siong is cheap byany of the traditional ways today.
This post was originally posted here. The writer, Willie Keng is a veteran community member and blogger on InvestingNote, with a username known as @Willie and has close to 140 followers.
And given the fact it’s biggest market istiny island Singapore, I don’t think shares look cheap unlike what manyanalysts are projecting.
Having said that, I find Sheng Siong possesses a safe,“low-risk” business qualities.
But does is it mean it’s a buy at today’s price?
Well, let’s find out.
Why Sheng Siong punches above its weight
There are many problems Singapore companiesface – lack of a large market, intense competition and especially, risingoperating costs.These are top issues supermarket chains face.
But what I’mlooking at is companies focusing on a particular niche that big players bigplayers are unwilling to thread – a niche.
And that’s where Sheng Siong stands out.
The thing is, Sheng Siong financial numbersare surprisingly good. It’s not because it’s in a well-protected, highlyprofitable industry. In fact, the opposite is true. Sheng Siong is rightin the middle of an intense grocery market.
To its left, there’s NTUC FairPrice thatdominates every corner of Singapore.
To its right, there’s Cold Storage. ShengSiong simply cannot compete head-on with these big players.
And both players havebig financial backers — the government owns NTUC FairPrice. While the JardineGroup, a rich family that owns DairyFarm’s Cold Storage.
These giant operators areoften anchor tenants in shopping malls. And occupy far larger shop spaces.
What’s more, e-commerce is also the annoying disruptor that tries to steal
market share from supermarkets like Sheng Siong.
But here’s what I found fascinatingabout Sheng Siong.What it lacks in size is its laser-focus on competing in aniche – attracting “time-strapped”, budget-conscious buyers.
You wouldn’t find a Sheng Siongoutlet in a shopping mall.
Yet, if you dive deeper, the 38-year-old supermarketchain is found almost in all HDB estates. Management doesn’t bother to fightwith NTUC or Cold Storage.
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