Any comments on this IPO?
The Company is distributing 90% of 2011 and 2012 profit as dividends. The yield based on 2011 estimated earnings is more than 7%.
What do you think?
Sheng Siong is expanding into the Malaysia market. I think they will do better than our NTUC Fairprice.
NTUC has failed in all the overseas ventures.
Come to think of it, I don't see too many GLC-linked companies making success in overseas markets.
How come hor?
There is a one-time gain of more than S$9m in FY2010 profit. If you take that out, the PE is around 12x.
This is a defensive stock. Given that inflation is setting into Singapore, there will be price adjustment in terms of the goods sold. The FCF is quite good too. There are hardly any capex except for their office HQ construction.
I will certainly continue to support Sheng Siong by patronising its outlets - after all, they offer value for money. But as for the IPO, am having second thots as the PE is 12X. In this bearish market, this is lofty PE
With the economic uncertainties in US/EU, you gotta be brave to apply for IPO share at PE of 12X. Any non-Blue Chip share with prospective PE of 6X is considered high in present market.
