Figure 1: Results at a glance
Cautious consumer sentiment could extend into FY17, maintaining pressure on topline
Management seeking new stores to mitigate closure of two major stores in FY17
Steady gross margin at ~25% and extend into FY17F
Maintained ‘Accumulate’ rating with slightly higher TP of S$1.13 (previously $1.10), based on an upgraded estimated 4.93 cents FY17 EPS and unchanged 23x PE multiple
We expect the nine new stores, alongside the two newly renovated and bigger stores at Loyang Point and Blk 506 Tampines Central, to provide support to FY17F topline growth. We expect operating cost pressures to remain contained due to slight easing of a tight labour market, softer rental reversion, and subdued inflation outlook, which will result in margin expansion.
Figure 3: Peers comparison
SSG is currently trading slightly above its Singapore peer but is somewhat in line with regional peers’ average, in terms of trailing P/E multiple.
Figure 4: 3-Yr Historical PER
Source: Bloomberg, Phillip Securities Research (Singapore) estimates