Sheng Siong Group

Sheng Siong Group (SSG) | Buy

Target price: $1.20

April 3 close: $0.945

Broker: Maybank Kim Eng, April 2

Excessive concerns about e-commerce disruptions led to 12-month underperformance of 10 per cent against the Straits Times Index, despite its results resilience.

SSG continues to offer convenience, focusing on fresh foods in densely populated HDB estates.

We resume coverage with a Buy rating, expecting catalysts from:

1) further improvements in consumer spending;

2) SSG's further market-share wins from convenience stores and traditional market grocers;

3) a potential surge in new stores in 2018; and

4) continued good results, supporting high return on equity and dividends.

We have also not included potential contributions from its new store in China, opened in Q4 2017.

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