Brokers' take
Sheng Siong > Buy Target price: S$1.27 July 13 close: S$1.08 RHB Research, July 13
WE reiterate 'buy' with a new S$1.27 target price from S$1.18, with 18 per cent upside, as we roll over our valuation to fiscal 2019. As the top pick of the sector, we favour Sheng Siong for its defensive nature and steady earnings growth, as the economy moves to the late expansionary phase.
We expect it to generate a steady EPS (earnings per share) CAGR (compound annual growth rate) of 10 per cent over fiscal 2017- 2020, led by an increase in store count and gross margin expansion. Strong cash flow generating capability should also allow it to support minimum dividend payout ratio of 70 per cent.
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