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Sheng Siong – Rising Defensively As New stores Open
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By: Joey Choy
Articles (1) Profile

Sheng Siong is engaged in the provision of supermarket supplies and supermarket operations.

The Company is a grocery retailer with approximately 33 outlets located all across the island.

Its stores are designed to provide its customers with both wet and dry shopping options, including an assortment of live, fresh and chilled produce, such as seafood, meat and vegetables.

Technical Analysis
At the time of writing, Sheng Siong is currently trading at a new high around the $0.85 level. It has continued to push higher each trading day since breaking above the key $0.75 resistance level in the middle of March 2015.

This $0.75 resistance has been holding for more than 2 years since Jan 2013 so any clearance above, which is what we have seen is a key positive as it breaks out of the sideways consolidation pattern.

It has consolidated from $0.75 to $0.80 briefly about two weeks ago before again staging a further breakout above $0.80 and heading to a high of $0.865 on 28 April 2015.

This counter is clearly in an uptrend over the long term with both the 100 and 200 day moving averages (MA) pointing upwards firmly and the shorter term 20 day MA line trending strongly above these longer term MA lines.

Short term trend is also bullish with the 20 day moving average trending upwards and lending support along the way for about 5 months.

Immediate support would be at $0.84, then the $0.80 level, and it can consolidate a while from the $0.84 to $0.87 range before more upside movement towards $0.90.

Any further breakout above the $0.90 psychological resistance level can pave the way towards the important $1.00 psychological resistance where we can expect a major resistance.

Another positive thing to note is that Sheng Siong has been trading upwards consistently above the upward sloping channel support line since December last year.

This has provided a good support along with the 20 day MA line. As long as it stays above the immediate support from $0.80 to $0.84, it is still poised to head higher gradually after each minor consolidation like what we have seen over the past 3 months.

Would be good to accumulate this counter on dips above $0.800 for any further upside or also average up along the way to ride the uptrend.

The MACD momentum indicator has been above the zero mark since December last year as it trades higher which is a good sign. There can still be more room to go as the momentum remains positive while it rises.

Fundamental Analysis
Sheng Siong has recently reported its 1Q15 results which were above expectations as this quarter usually enjoys better results on the back of Chinese New Year festive spending.

1Q15 earnings expanded 12.2 percent YOY, driven by sales growth (4.6 percent YOY) and a stronger gross margin of 24.4 percent.

Sheng Siong has been consistently growing its pool of retail stores in neighbourhood areas to reach out to more consumers and providing greater conveniences.

Since Dec 14, it has secured five new stores, of which two has opened, in Dec 14 and Jan 15, respectively. The remaining three are due to open by Jun 15 which will increase its total retail space by 6.4 percent.

These new stores will continue to drive growth over the next few years as consumers see its brand as affordable and catering to the masses.

At current prices, it is offering a dividend yield of about 4 percent, which is fairly attractive considering the potential capital upside to be reaped further.

You can follow Joey on his websites for further calls here.

Joey is one of the Top Tier Remisiers (Stock Brokers) and Traders in Phillip Securities, and was awarded Top CFD specialist in 2013.

Please click here for more information about this author.

Sheng Siong Group  1.170 -0.020 -1.68%   
Business: Co is a supermarket chain operator.

Insight: Apr-19, 1Q19 revenue rose 10.1% to $251.4m mainly ... Read More

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