$SHENG SIONG GROUP LTD(OV8.SI)$ is one of the most defensive stocks in the SGX. It is a consumer staple, non cyclical type of stock that will be insensitive to economic trends.
Sheng Siong is the 3rd largest chain of supermarkets in Singapore. From its humble beginnings in 1985 Sheng Siong now has 65 stores.
In its latest earnings report, Sheng Siong Group Net Profit grew 13.9% year on year to SGD35.2 million for 1Q FY2022. Revenue for 1Q FY2022 grew by 6% year on year to SGD358 million. This is due to contributions from new stores and comparable same store sales. Gross Profit increased by 9.8% year on year to SGD102.7 million as margin improved to 28.7% due to higher revenue and a change in product mix.
Sheng Siong is synonymous with good value in Singapore. With high inflation, Sheng Sion will be able to pass the price increases to its customers and thereby increasing its sales revenue. Even with recessionary headwinds ahead, consumers will eat more at home and Sheng Siong will see increased customer spending in its supermarkets.
I am bullish on $SHENG SIONG GROUP LTD(OV8.SI)$ as it ticks all the fundamentals of a quality stock. It is profitable, has a healthy balance sheet with good free cash flow. Most importantly, $SHENG SIONG GROUP LTD(OV8.SI)$ has an excellent management team whose interests are aligned with shareholders. Sheng Siong also pays steady and regular dividends year after year.
In a Bear Market, $SHENG SIONG GROUP LTD(OV8.SI)$ is a defensive play and a great hedge against high inflation.
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