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Sheng Siong's CFO resignation a 'surprise', no 'potential red flags' at this point: DBS

Felicia Tan
Felicia Tan9/21/2022 05:45 PM GMT+08  • 2 min read
Sheng Siong's CFO resignation a 'surprise', no 'potential red flags' at this point: DBS
One of Sheng Siong's branches. Photo: Albert Chua/The Edge Singapore
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DBS Group Research has kept its “buy” call and target price of $1.76 after Sheng Siong Group’s (SSG) chief financial officer (CFO), Joanne Chua, resigned.

According to the bourse filing dated Sept 19, Chua resigned to “pursue [her] personal interests”.

The news came as a surprise to the analysts at DBS, considering Chua’s appointment was just made on April 1, 2021.

On the same day, however, Sheng Siong Group announced the appointment of Fan Hongbo as the financial controller of the company. The analysts at DBS pointed out that the description of Fan’s role is similar to that in Chua’s announcement.

At the time of her appointment, Chua had almost four decades of work experience, of which 22 of them was in the fast-moving consumer goods (FMCG) industry.

The group’s audit and risk, and nominating committees concluded that there are “no material reasons” for Chua’s resignation.

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In the same filing, it was revealed that Chua’s last day with the group will be on Feb 28, 2023. The long notice period of around five months was “likely timed” to coincide with the release of Sheng Siong’s FY2022 results, which should be reported on the Singapore Exchange (SGX) by the end of February in 2023.

Sheng Siong’s FY ends on Dec 31.

The long notice period also provides a good lead time for Fan to assume her duties.

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“We do not see any potential red flags at this juncture,” the DBS team writes. “Despite a slight easing of topline in [Sheng Siong’s] 2QFY2022 by 7.4% y-o-y, this was on the back of a high base effect in 2021 due to in-home consumption as Covid-19 restrictions were still prevalent then.”

“Notwithstanding that, we believe Sheng Siong’s operations [are] likely to remain relatively stable with surging inflation that bites consumers’ wallet, thus prompting a moderation in dine-out in favour of more affordable in-home consumption,” the team adds.

Shares in Sheng Siong closed 1 cent lower or 0.63% down at $1.58 on Sept 21.

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