Sheng Siong Group (OV8) Q2 2024 earnings summary

Executive summary

• Revenue rose 3.4% year-over-year to S$714.2 million for 1H FY2024, driven by a longer sales period before Lunar New Year.

• Net profit increased 6.8% to S$69.97 million, with EPS up 6.9% to 4.65 cents.

• Gross profit margin improved to 30.1% from 29.7% due to a better sales mix.

• Opened two new stores and expanded retail space; total stores now 77 (71 in Singapore, 6 in China).

Financial highlights

• Operating profit grew 6.4% to S$80.93 million; profit before tax up 7.0% to S$85.06 million.

• Other income surged 45.4% to S$7.28 million, mainly from higher government grants and supplier advertising.

• Administrative expenses rose 14.1% due to higher staff costs and donations from carrier bag charges.

• Cash generated from operations increased to S$93.0 million, up S$15.2 million year-over-year.

• Interim dividend of 3.20 cents per share declared, payable 30 August 2024.

Outlook and guidance

• Retail sales softened in Q2 due to overseas travel but are expected to improve in 2H 2024.

• Core inflation is expected to moderate, but risks remain from global disruptions and cost pressures.

• The Group plans to open two more stores by July 2024 and is eyeing further expansion as more HDB sites become available.

• Focus remains on operational efficiency, sales mix improvement, and supply chain diversification.