+ Revenue resilience. Revenue growth was entirely powered by new stores opened for a year. 1Q21 annualised revenue per sq ft remained a lofty S$2,363 vs. pre-pandemic’s S$1,916 in 2019. Gross margins at 27.6% were above historical levels of 26.8%, thanks to lower input prices and a higher sales mix of fresh goods.
+ Healthy cash and strengthening balance sheet. Operating cash flow generated in 1Q21 was S$28.8mn. Net cash is now S$241mn (4Q20: S$224mn).
– No store openings. There were no new store openings in the past six months. SSG was not successful in two tenders in November. HDB has temporarily paused on tenders except for a large store SSG is looking to bid in the current quarter which could potentially be rolled out in 3Q21.
1Q21 revenue per sq ft remained elevated at S$2,363 on an annualised basis (FY20: S$2,423). A reason was the continued closure of international borders, which kept more households in the country. Working from home was another contributor. As borders re-open, growth in FY22e should stem from accelerated store expansion from the recent pause in HDB tenders.
Maintain ACCUMULATE with unchanged TP of S$1.71
SSG’s investment merits remain its impressive 26% ROEs, dividend yields of 3.2% and net cash of S$224mn. Stock catalysts are expected from new store openings.