Net Cash Stock#2 - Sheng Siong Group Ltd
Sheng Siong Group Ltd is one of Singapore’s largest retailers with 63 stores located all across the island.
Its chain stores are designed to provide customers with both “wet and dry” shopping options ranging from a wide assortment of live, fresh and chilled produce, such as seafood, meat, fruits and vegetables to packaged, processed, frozen and/or preserved food products as well as general merchandise, including toiletries and essential household products.
Over the past decade, it has begun developing a selection of house brands to offer our customers quality alternatives to national brands at substantial savings. To date, it has over 1,400 products under 23 house brands.
As of its latest 3rd Qtr results, Sheng Siong's net profit for the third quarter to September rose 8.3% year on year to S$34.4 million on higher revenue and improved sales mix that included products with higher margins.
Gross profit margin also increased to a record high at 29% (+0.1 ppt QoQ), mainly attributable to higher sales mix of fresh products and house brands. Coupled with the 3rd overseas store opening, analysts are increasing their target prices like OCBC
here and Philip Capital
here.
Sheng Siong is in a net cash position of $177 million which is substantial in terms of its borrowings. It carries total financial borrowings of $70 million, which meant that it has a comfortable quick ratio of 2.52X.
The cash rich position will allow Sheng Siong to expand its operations not only in Singapore but also in China, which they have started to have a few stalls. This will definitely bode well for its future.
Sheng Siong last closed at $1.51. This values the company at a P/E of 16.2X and a dividend yield of 4.3%.
Net Cash Stock#3 - GS Holdings
GS Holdings Limited has a diversified business model with an aim to create continuous streams of income.
Since 2019, the Group ventured into the following 2 new businesses with the aim of diversifying our business model and creating additional streams of income: 1) F&B business, 2) Branding, Operation and Procurement Services.
As of its half- yearly report, GS’s revenue increased slightly by 1% to $ 6.25 million. Its net profit decreased by 30% to$ 1.01 million. This is mostly at the back of higher administrative expenses.
Free cash flow came in slightly negative. Cash balance of the company excluding its cash from encumbrance is at a healthy level of $5.6 million
GS is in a net cash position of $ 1.6 million excluding its encumbrance of approximately $20 million. It carries total financial borrowings of $4.1 million. Taking into account the encumbrance of $20 million, the company will be in a net cash position of $21.6 million.
With F&B industry taking a hit right now across Singapore, it might be a good opportunity for the company to swoop up businesses that are suffering at a good valuation. This would bode well for investors.
GS last traded at $0.37, which valued the company at a P/B ratio of 2.4x and around 2.5% dividend yield.