Sheng Siong 8 Steps Valuation

Hi YT,

Fantastic work! At least you completed the analysis and have your own conclusion.

Few comments from my end:
1. For dividend per share, you may want to use full year dividend reported in the annual report. I notice that you're calculating the total dividend per share manually, probably according to the year? You can refer to the annual figure AR2023 (Page 28). SS benefited greatly during the Covid boom, that was the reason for the spike of dividend. Since then, SS still managed to hold the dividend per share without paying beyond their earnings as we can see from their payout ratio. So it seems that their business has normalised yet they can still maintain the dividend.
2. China expansion is a bonus. Don't bet on it because the retail competition in China is insane.
3. I liked the description on your valuation range 'Jiak Buey Liao'. Lol! Agreed with you that the current yield is decent.

Your previous message (so you don't have to retype them) is below.

Hi Rusmin, this is a follow up valuation of Sheng Siong based on historical dividend yield, Step #8. Below is my analysis. What do you think? What did I miss? What would you have done if you were investor of ShengSiong.
Thank you!

Here is my view based on the timeline:

2011-2016: yield were quite stable, with difference of 1% between high and low. Overall looks quite stable & flatish. not much happening.
2017- present: Seeing more volatile movement, lowest @1.92% in Aug 2020 & highest @4.57% in Oct 2021. It's easier to judge when to buy or sell.

As of today 11 Sep 2024, the price is at $1.51, DPU of 2023 was 0.065, so the yield is 4.3%. Meaning the current yield is 12% lower than historical highest 4.8% in 2013 (*not sure if this is a relevant observation since it was so long ago) In conclusion, the current yield indicates the price is still at a fair value range now, not too cheap also not too expensive.

I'm a long term investor, I will also consider the risk of recession & interest rates coming down soon. Given that OV8 has been a very resilient stock especially during recession there is more upside to it. I will continue to buy or DCA until it reaches full allocation.

Hi YT,

Good work again!

For DPS 2023, we are using 6.25c. You can refer to the annual report for this similar data. With current yield of around 4.2%, SS is actually below fair value or closer to historical high yield of 4.6% if we use average yield of around 3.7%.

AR2023, Page 28

https://shengsiongcontent.s3.ap-southeast-1.amazonaws.com/wp-content/uploads/2024/04/02165012/FY-2023-Annual-Report.pdf