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Cecilia Lui asked 5 months ago

Hi Rusmin,  for Sheng Siong, should I take the dividend 6.5 cents to work out the dividend yield as The company had given out 6.5 cents due to good performance of year 2020.?
Secondly, do you think Sheng Siong has a scalable and long runway business, consider Singapore is a small market and and their venture into China market?
Thirdly, for valuation method, can we use PE or Price to Cash flow?  
 

3 Answers
Victor Chng answered 5 months ago

Hi Cecilia,
 
1.Sheng Shiong latest dividend is an exceptional year. Hence, it will be too optimistic if you use it. 

2.I will say Sheng Siong business is scalable but the runway is short as Singapore is a small market. Their China venture is still insignificant to their revenue. It is more of a growth plan than a growth driver.
 
3.You can use PE valuation for Sheng Siong.
 
 

Cecilia Lui answered 5 months ago

Hi Vicotr
Touch on my point 1, I noticed Sheng Siong Net profit growth has slowed down (except for year 2020), so to work out dividend yield, I would use year 2019 EPS?
And to clarify with you again, why you said Sheng Siong China Venture is more of a growth plan than a growth driver, They are opening their 3rd store in China Kumming,
the first 2 store are already profitable, but the revenue and profit and still very insignificant. (as you explained in workshop, growth plan is things not yet happen)?
 
 

Victor Chng answered 4 months ago

Hi Cecilia,
 
1.To work out dividend yield, you just have to use 2019 dividend. Sheng Siong (SS) dividend had been stable for the past few years and the increase in 2020 was due to covid situation spike which is unlikely to maintain in the future. 
 
2.Yes they are opening more store in China but the portion have not contributed much to the revenue of the business. Even if the revenue of China will to double up, it still will not move the revenue that much. Hence, China business is still insignificant until it can account at leat 10% of revenue and still growing fast.