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Sheng Siong proposes rights issue at a 5.4 percent discount
Corporate Digest | 04 September 2014

Yes, our local homegrown groceries retailer has proposed a rights issue to raise $80.4 million. This comes after its proposed joint venture with Kunming Lu Chen Group to operate supermarkets in China.

Sheng Siong was founded by Mr Lim Hock Chee, now its CEO. After winding up his stall selling pork in 1985, Lim founded Sheng Siong’s foremost operation in a single shop house unit. Sheng Siong has evolved since into a supermarket chain of 33 stores in Singapore.

  • Sheng Siong Group proposed a rights issue for up to 120 million shares at $0.67 per share, where the rights represent 8 percent of the enlarged share capital.
  • The expected gross proceeds of $80.4 million of the Placement will increase the Group’s capital base, and will provide the Group with funds for its future expansion plans in Singapore, which include the acquisition of properties for new retail outlets in areas which the Directors view as presenting viable business prospects and potential new markets in Singapore.
  • This is in line with the Group’s strategy of selectively acquiring retail space in strategic locations. The Group believes that this strategy will complement the Group’s historical strategy of leasing new retail outlets, and positions the Group more favourably for grow.
  • Sheng Siong intends to continue to distribute up to ninety percent (90.0%) of its net profit after tax to its shareholders for the financial years ending 31 December 2015 and 31 December 2016, as the Company wishes to reward its shareholders for participating in the Group’s growth.

Sheng Siong’s recent venture into the crowded china market may have been viewed as risky.

However, would its rights issue coupled with its plans for further expansion in Singapore bode well for its shareholders?

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