Sheng Siong *Official* (SGX: OV8)

[SpinFire]

Lim Hock Chee's spouse bought 1650 lots. No wonder price starts to rise

Hmmm interesting. They declared it as 'Accidental omission of disclosure of Lim Hock Chee's spouse's acquisition of shares via market transaction' on SGX. I wonder if they even intended to declare it in the first place.

 

[felixleong]

at over 20 times earnings, don't u all think sheng shiong could be overvalued?

 

[The Accountant]

at over 20 times earnings, don't u all think sheng shiong could be overvalued?

The PE reflects the amount of confident investors have for this stock and it can continue to have this kind of valuation for years. Proberbly future estimate earnings have been priced in to arrive at its fair value.

Brenchmarking against DFI, it should be fair at this level of PE. However a black swan event could cause it's PE to drop drastically like what happened to super. Growth stock are easier to evaluate as compare to cyclical stock in my opinion.

 

[felixleong]

I still remember when OCBC help sheng siong IPO, the valuations was only 10 times earnings, now analyst all shouting buy calls, hard to get it cheap liao

 

[ohgin123]

The PE reflects the amount of confident investors have for this stock and it can continue to have this kind of valuation for years. Proberbly future estimate earnings have been priced in to arrive at its fair value.

Brenchmarking against DFI, it should be fair at this level of PE. However a black swan event could cause it's PE to drop drastically like what happened to super. Growth stock are easier to evaluate as compare to cyclical stock in my opinion.

What kind of black swan event.

Why do you even classify sheng siong under cyclical stock?

 

[felixleong]

The PE reflects the amount of confident investors have for this stock and it can continue to have this kind of valuation for years. Proberbly future estimate earnings have been priced in to arrive at its fair value.

Brenchmarking against DFI, it should be fair at this level of PE. However a black swan event could cause it's PE to drop drastically like what happened to super. Growth stock are easier to evaluate as compare to cyclical stock in my opinion.

looking at the recent declines of other growth stocks such as OSIM and Super group, I worry about sheng siong reporting weaker than expected earnings

at 20 times earnings, analyst are expecting sheng siong to be a 10-20% grower

however looking at the SG economy, its only growing at 3% and we are slowing down the intake of FTs

therefore sheng siong will depend very heavily on its overseas expansion such as malaysia and china. any poor execute that results in the decline of earnings could lead to a sharp sell off, so SS investors please beware

my conclusion is that at 20 times earnings with a potential dividend yield of about 5%, sheng siong seems to be fairly priced with little to no margin of safety

cheers

 

[wahkao3]

looking at the recent declines of other growth stocks such as OSIM and Super group, I worry about sheng siong reporting weaker than expected earnings

at 20 times earnings, analyst are expecting sheng siong to be a 10-20% grower

however looking at the SG economy, its only growing at 3% and we are slowing down the intake of FTs

therefore sheng siong will depend very heavily on its overseas expansion such as malaysia and china. any poor execute that results in the decline of earnings could lead to a sharp sell off, so SS investors please beware

my conclusion is that at 20 times earnings with a potential dividend yield of about 5%, sheng siong seems to be fairly priced with little to no margin of safety

cheers

how about ST Eng, its like 18 PE? pretty high like Sheng siong?

 

[felixleong]

how about ST Eng, its like 18 PE? pretty high like Sheng siong?

Sheng siong is a growth stock in a competitive market with low margins against big players like dairy farm and ntuc

St engg is a defensive stock in a monopoly doing defense business with high margin.

They are like apple and orange, so u shouldn't compare them, their PE are high for different reasons

Among defensive stocks, should compare st engg against stuffs like starhub, m1, comfort delgro, smrt, singpost, sats etc instead which are trading mostly around 20 times earnings or higher

 

[wahkao3]

shouldnt growth stock be priced at higher PEs than defensive?

I think sheng shiong is BOTH growth and defensive.
Growth- due to expanding profits. But at very low levels around 3-4%. using TTM.
Heck, 3-4% is very low. i dont see much growth actually.
Defensive - due to business nature. sale of non-discretionary goods

 

[The Accountant]

What kind of black swan event.

Why do you even classify sheng siong under cyclical stock?

sorry if i cause some misunderstanding. What i mean is Sheng Shiong is a growth stock which explains why the PE is high.

We can never predict a black swan event, thats why its called black swan.

however looking at the SG economy, its only growing at 3% and we are slowing down the intake of FTs

therefore sheng siong will depend very heavily on its overseas expansion such as malaysia and china. any poor execute that results in the decline of earnings could lead to a sharp sell off, so SS investors please beware

I like your opinion regarding this. You're right that existing revenue growth is brenchmark against our GDP and population growth. However Sheng Siong can do something which Singapore cannot. They can set up new stores locally which increases customer count which is the current situation they are in now. Of coz the question here is whether the store location be an effective one.

I have a different opinion about expanding overseas. You get much higher business risk for that matter. Challenger has already raise a white flag for expanding overseas.

Your point is clear, if the estimate did not meet forecast perhaps share price will fall. But thats the nature of growth stock isn't it? This stock is not undervalue, neither is it overvalued imo.

 

[felixleong]

sorry if i cause some misunderstanding. What i mean is Sheng Shiong is a growth stock which explains why the PE is high.

We can never predict a black swan event, thats why its called black swan.



I like your opinion regarding this. You're right that existing revenue growth is brenchmark against our GDP and population growth. However Sheng Siong can do something which Singapore cannot. They can set up new stores locally which increases customer count which is the current situation they are in now. Of coz the question here is whether the store location be an effective one.

I have a different opinion about expanding overseas. You get much higher business risk for that matter. Challenger has already raise a white flag for expanding overseas.

Your point is clear, if the estimate did not meet forecast perhaps share price will fall. But thats the nature of growth stock isn't it? This stock is not undervalue, neither is it overvalued imo.

yup i strongly agree that SS is kinda fairly priced already, neither under or over valued

 

[felixleong]

shouldnt growth stock be priced at higher PEs than defensive?

I think sheng shiong is BOTH growth and defensive.
Growth- due to expanding profits. But at very low levels around 3-4%. using TTM.
Heck, 3-4% is very low. i dont see much growth actually.
Defensive - due to business nature. sale of non-discretionary goods

growth stocks this category can split into 3 areas

slow growers - stocks that grow along the economy like bank stocks (PE 10-15)

fast growers - successful businesses that can rapidly expand/replicate their model, sheng shiong, osim, break talk, super group
(PE 15-25)

and lastly the hyper growers - alibaba, facebook, tesla
(PE 50+)

so to answer your question, should growth stocks trade at higher PE than defensive stocks? it depends on how fast it is growing.. if its fb or alibaba, then yeah it should trade at higher pe for sure

cheers

 

[wahkao3]

i think growth stocks are hot and sexy!

 

[sandwicher]

Sheng siong is a growth stock in a competitive market with low margins against big players like dairy farm and ntuc

St engg is a defensive stock in a monopoly doing defense business with high margin.

They are like apple and orange, so u shouldn't compare them, their PE are high for different reasons

Among defensive stocks, should compare st engg against stuffs like starhub, m1, comfort delgro, smrt, singpost, sats etc instead which are trading mostly around 20 times earnings or higher

Hmm I'm sorry. But ST Engg is a high margin company? If I rmb correctly ST Engg is a thin margin business.

Also, it is not a monopoly in nature. There are other MROs in the world. They are only, exclusive to SG's Defence contracts, which takes up maybe 50% of revenue their aerospace arm, translating to about 25% of total revenue? Profit wise may or may not be true.

Also, I would prefer to compare their PE with related competitors like SIA Engg rather than a blanket 'Defensive stocks'. After all, the industry's average PE for telecommunication, transport, property etc etc varies quite a bit.

 

[felixleong]

Hmm I'm sorry. But ST Engg is a high margin company? If I rmb correctly ST Engg is a thin margin business.

Also, it is not a monopoly in nature. There are other MROs in the world. They are only, exclusive to SG's Defence contracts, which takes up maybe 50% of revenue their aerospace arm, translating to about 25% of total revenue? Profit wise may or may not be true.

Also, I would prefer to compare their PE with related competitors like SIA Engg rather than a blanket 'Defensive stocks'. After all, the industry's average PE for telecommunication, transport, property etc etc varies quite a bit.

hm.. for margins to be considered high or low can be quite subjective at times
I think ST engineering should be able to maintain net margins of over 8%, to me that's pretty good already

I would say the monopoly probably only applies in their local business, while overseas operations could be considered as oligopoly as this industry has a very high barrier of entry and has a stable establishment of players that have been around for a long time

when comparing stocks, would be very useful to put SIA engg beside ST engg

if one wants to dig further, can also compare against other related stocks trading in the US market too, which would be more accurate for relative valuations

cheers

 

[felixleong]

i think growth stocks are hot and sexy!

so sheng siong u planning to buy ma???

 

[InnovaIQ]

I will add 50lots by end Jan 2015.

 

[tiny]

I will add 50lots by end Jan 2015.

Should wait after April 2015.

 

[wahkao3]

so sheng siong u planning to buy ma???

no buy for me.
I only dare to go for low risk high return opportunities.

Sheng siong is not low risk enough for me.

host and sexy growth stocks are usually not low risk

 

[felixleong]

no buy for me.
I only dare to go for low risk high return opportunities.

Sheng siong is not low risk enough for me.

host and sexy growth stocks are usually not low risk

Currently what are u holding? I see u so active in forums