Sunday, July 29, 2012

Breadtalk and Sheng Shiong

Recently, I wrote about investing in things I use - Mapletree Commerical Trust and Breadtalk.  The idea was really to look out for investment opportunities based on the goods and services that I come across in Singapore.  If one thinks about it, there are probably many goods and services that I use or come across during my daily life.  And that probably should get me thinking on whether this presents itself as a good investment opportunity.

Breadtalk


I frequent Breadtalk and Toastbox quite often.  So it is not surprising that I am pretty well acquainted with their business.  While you won't be able to find a toast box located side by side with Breadtalk all the time, most store outlets now usually have both Breadtalk and Toastbox located together.  In terms of crowds, Toastbox is always crowded.  It should be profitable.  Each Toastbox outlet probably only hires 4 to 5 staff. And the number of people ordering takeaways also seem to be quite a lot.  For Breadtalk, it is just a bakery but the morning crowds usually throng the place.  I like Breadtalk's business from how I view it.  At least the Singapore side of the story.  I remember seeing Breadtalk shops in Malaysia that looked quite empty.

Sheng Shiong

Well, perhaps this is a stock that I better start putting in my shortlist.  Sheng Shiong is Singapore's third largest(?) supermarket store.  It has stores located at many neighborhoods all around Singapore and caters to the heartlanders.

Most Sheng Shiong supermarkets that I go to are always crowded.  That is a general observation and so their business should be good though I recognise that profit margins for retail outlets always tend to be lower.  It is a competitive business afterall.

If Sheng Shiong commits to paying 90% of its profit after tax as dividends, the stock will probably be quite attractive. This is however unlikely as it probably looks to expand in Singapore and the region.  Nevertheless, its dividend yield at 90% payout is a very attractive 6%.

1 comment:

  1. Agreed that Sheng Shiong is a potentially good stock. I am also tracking this stock.

    Check out my investment thoughts in SG Web Reviews (www.sgwebreviews.blogspot.com)

    ReplyDelete

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