Tax refund, higher revenue lift Sheng Siong's Q3 earnings

SHENG Siong Group on Thursday posted higher third-quarter earnings, lifted by a rise in revenue and a refund of previous years' taxes amounting to S$2.2 million.

Net profit for the three months as at end September rose 25.3 per cent year on year to S$19.6 million.

This translates to earnings per share of 1.31 Singapore cents, up from 1.04 Singapore cents a year ago.

Revenue for the quarter grew 4.2 per cent to S$210.9 million, led mainly by new stores and comparable same store sales.

But the increase in sales was partly offset by stores at Loyang Point and The Verge, which were not included in computing comparable same-store sales as they were not fully operational either during the period under review or in the corresponding prior period.

The group said that revenue at the Woodlands store, which will be closed in November 2017, continued to decline as residents moved out from the affected blocks in the vicinity. Excluding this store, comparable same-store sales would have grown by 2.7 per cent in Q3.

Cost of sales for the quarter edged up 4.4 per cent to S$156.4 million, while distribution expenses dipped 2.9 per cent to S$1.5 million.

For the nine months, net profit came in at S$52.9 million, up 11.8 per cent year on year due to higher gross profit and a tax refund, while revenue went up 5 per cent to S$630 million. Earnings per share for the period was 3.52 Singapore cents, higher than the year-ago period's 3.14 Singapore cents.

In its outlook, the group said that competition in the supermarket industry is expected to remain keen, particularly with the influx of large online retailers.

Weather conditions or other disruptions in the supply chain may affect supplies and may drive up the group's input costs, it noted.

"The group has successfully bid for three new HDB shops at Woodlands Street 12, Edgedale Plains Block 660A in Punggol and Anchorvale Crescent Block 338 in Sengkang. Subject to the execution of tenancy agreements with the HDB, all the three new stores should be operational in Q4 2017," it said.

It added that it is still looking for suitable retail space, particularly in areas where it does not have a presence.

Competition for retail space, especially for new HDB shops, is expected to be rational though keen, Sheng Siong said, adding that its store at Woodlands would be permanently closed in November 2017 as the HDB is re-developing the area.

The group also said that the fitting out of the new store in Kunming, China, is now completed and subject to regulatory approvals. The supermarket is expected to begin operations before the end of FY2017.

The stock closed unchanged at S$0.93 on Thursday, before results were released.