Virus? What virus? Sheng Siong share price shrugged off all talks of coronavirus impacts on its stock by staging one of the most powerful rally in years. It certain seems that the sky is the limit for Sheng Siong share price. The initial onset of the coronavirus saw Singaporeans scrambling and hoarding food items at supermarkets. The mad scramble sent Sheng Siong share price soaring like crazy. As of 20 February 2020, Sheng Siong share price smashed a record high of $1.32.
Given the bullish form of Sheng Siong share price, investors must be smiling to themselves. Since IPO in 2011, Sheng Siong share price had stormed from $0.33 to the current $1.30 level. Investors should be laughing all the way to the bank because of the huge capital appreciation and the consistent dividend pay outs.
To be frank, the supreme form of Sheng Siong share price confounded me. Previously, I had some reservations about investing in this counter because it was listed only in 2011 – the post Great Financial Crisis era. Due to this, there is a lack of track record on how Sheng Siong share price will perform during crisis times. But Sheng Siong share price had managed to establish itself as a recession-proof counter after overcoming the challenge of global trader war of 2019 and the virus outbreak in 2020.
Question now is: will Sheng Siong share price continue its positive momentum in 2020? With the massive run up in Sheng Siong share price, has this counter transformed into a growth stock (instead of dividend stock)? Dividend yield has slowed to a low of 2.65% against the backdrop of rising Sheng Siong share price.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Sheng Siong share before. Whether Sheng Siong share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Sheng Siong share price in high heavens
One of the smartest moves by the management is building its retail network in HDB shops instead of REIT malls. In recent years, REITs had been blamed for rising rentals in their bids to enhance DPU for their unitholders. Avoiding this trap, Sheng Siong has been able to keep a very disciplined cost management through the years. For FY2019, gross profit margin increased marginally to 26.9% from 26.8% in FY2018.
Currently, there are 61 Sheng Siong outlets located primarily in the heartlands of Singapore. The latest outlets are Block 118 Aljunied Avenue 2, with an area of approximately 18,000 square feet (opened on 1 January 2020) and another store at Block 202 Marsiling Drive (5,540 square feet) (opened on 11 January 2020).
With only 2 stores in China, it appears to me that the decision to take a calibrated approach to store expansion in China was a prudent move. Had the management been aggressive, the current unfolding coronavirus may have walloped the business growth.
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