SINGAPORE (Oct 28): Sheng Siong’s 3Q results may have come in line with analyst expectations, but the company’s outlook remains bleak at best, with UOB Kay Hian and Maybank Kim Eng maintaining their “hold” rating on the stock.

UOB Kay Hian’s analysts Jonathan Leow and Andrew Chow noted that the group’s revenue rose just 1.2% to $202.4 million for the quarter to Sept, from new stores. What concerned the pair was the underlying 1.15% decline in same-store sales, which reflected a “weak operating environment and intense competition”.

Earnings however grew 8.3% to $15.7 million, as gross margins improved 1.2 percentage points to 25.9% due to the shift towards fresh food sales and higher supplier rebates for volume display and bulk handling services. Leow and Chow expect the group to report gross margins of between 25.5% and 25.7% for FY16 to FY18, and has cut its price target from $1.13 to $1.12.

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