Posted on 6th Aug 2011 @ 4:02 AM

Singapore, 5 August 2011 – Sheng Siong Group Ltd. (“Sheng Siong” or the “Group”), one of Singapore’s largest retailers, launched today its initial public offering (“IPO” or “Offering”) in conjunction with its listing on the Mainboard of the Singapore Exchange Securities Trading Limited (“SGX-ST”).

The Invitation

The Invitation consists of:

1. 15.0 million shares at S$0.33 per share by way of public offer; and
2. 336.5 million shares at S$0.33 per share by way of placement,

payable in full on application (subject to the Over-allotment Option).

Oversea-Chinese Banking Corporation Limited (“OCBC Bank”) is the issue manager, underwriter and placement agent for the IPO. In connection with the IPO, the Group has granted OCBC Bank an over-allotment option of up to an aggregate of 52,725,000 additional new shares, representing 15.0% of the total number of InvitationShares. The price earnings ratio, based on net EPS for FY2010 and post-invitation share capital of 1,341,500,000 shares, is 10.4 times.

Mr. Lim Hock Chee, Chief Executive Officer of Sheng Siong Group Ltd. commented, “The launch of Sheng Siong today is an important milestone not only for the Group, but also in the development of Singapore’s grocery retail industry. As a home-grown grocery chain to be listed in Singapore, Sheng Siong presents a unique investment opportunity for investors to benefit from the stable, cash-generating grocery chain business, as well as attractive dividend distributions of up to 90% of the net profit for FY2011 and FY2012. The management team is committed to upholding our reputation, which is synonymous with quality and freshness, and delivering growing returns for our shareholders.”

Company Background

Sheng Siong Group Ltd. is one of Singapore’s largest retailers with over S$628.4 million in revenue for FY2010. The Group is principally engaged in operating the Sheng Siong Groceries Chain, including 23 stores across Singapore. With an aggregate floor space of approximately 340,000 sq. ft., Sheng Siong stores are primarily located in the heartlands of Singapore, and designed to provide customers with both “wet and dry” shopping options, including a wide assortment of live, fresh and chilled produce, such as seafood, meat and vegetables, in addition to processed, packaged and/or preserved food products as well as general merchandise such as toiletries and essential household products.

Sheng Siong has developed a selection of housebrands to offer customers quality alternatives to national brands at substantial savings. The Group offers over 300 products under 10 housebrands’ which are typically priced lower than comparable international or national brands.

Financial Highlights

Sheng Siong reported 3.0% increase in revenue to S$628.4 million in FY2010 from S$610.2 million in FY2008, while gross profit rose 19.8% to S$136.8 million in FY2010 from S$114.2 million in FY2008. The increase in gross profit was due to more direct sourcing from suppliers, which reduced direct material costs. In terms of net profit, the Group registered 106.8% increase to S$42.6 million in FY2010 from S$20.6 million in FY2008. The increase is attributable to the reduction of cost through the consolidation of operations and the gain on disposal of other investments of S$3.1 million in FY2009 and S$9.6 million in FY2010. The disposal of other investments is part of the Group’s efforts to focus on the core business.

Value Creation

To create value for shareholders, Sheng Siong plans to adopt several key strategies to improve productivity, profitability and growth:

• Procure more products from direct suppliers to eliminate middlemen expenses and reduce costs.
• Build on large network of over 1,000 suppliers and contract manufacturers to wield greater bargaining power in terms of the purchase prices of products.
• Expand selection of housebrands and housebrand products.
• Improve logistics management to optimise inventory holdings and lower distribution costs. The new corporate headquarters and warehousing and distribution facility, Mandai Link Distribution Centre, was completed in May 2011 with a floor area of approximately 543,090 sq. ft. The new centralised facility will increase operational efficiency by enabling the Group to warehouse, process and distribute proportionately larger quantities of goods and benefit from economies of scale in terms of manpower, transportation and fuel costs.
• Enhance operating efficiency through computerised systems. The Group has invested in computerised systems that assist in controlling and replenishing inventory levels, as well as in analysing various aspects of business and operations. The computerised systems have enabled the Group to maintain low and effective levels of inventory and make timely decisions regarding purchasing and distribution matters. The Group intends to continue upgrading computer network systems, to further enable better allocation of resources, reduce costs associated with carrying excess or unsold inventory by ordering “just in time”, and more accurately identify and analyse sales trends, consumer preferences and consumption patterns to align product selection with customers’ requirements.

Future Plans and Use of Proceeds

The Group plans to use its net proceeds of approximately S$62.6 million from the IPO for the following purposes:

• approximately S$30.0 million to repay the term loan for Mandai Link Distribution Centre, the new corporate headquarters and warehousing and distribution facility.
• approximately S$20.0 million to develop and expand the Group’s grocery retailing business and operations in Singapore and overseas.
• approximately S$12.6 million for working capital purposes.

Indicative Offer Timetable

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Issued for and on behalf of Sheng Siong Group Ltd.
By Financial PR Pte Ltd
For more information please contact:
Joanne LOOI, joanne@financialpr.com.sg
Nicole CHEN, nicole@financialpr.com.sg
Tel: (65) 6438 2990 Fax: (65) 6438 0064

This press release is made in reliance on Section 251(8) of the Securities and Futures Act, Chapter 289 of Singapore, and does not constitute an offer, invitation or solicitation to subscribe for the shares in Sheng Siong (the “Sheng Siong Shares”) in Singapore or any other jurisdiction nor should it or any part of it form the basis of, or be relied upon in any connection with, any contract or commitment whatsoever. The information in this press release is qualified in its entirety by, and is subject to, the more detailed information set out in the prospectus dated 4 August 2011 (the “Prospectus”) registered by the Monetary Authority of Singapore. The information presented in this press release is subject to change. A printed copy of the Prospectus and the application forms in respect of the offering of ordinary shares in the capital of Sheng Siong Group Ltd. (the "Sheng Siong Shares"), may be obtained upon request, subject to availability, from Oversea-Chinese Banking Corporation Limited at 65 Chulia Street OCBC Centre Singapore 049513 and from members of the Association of Banks in Singapore, members of the SGX-ST and merchant banks in Singapore during normal office hours. Anyone wishing to acquire the Sheng Siong Shares will need to make an application in the manner set out in the Prospectus. Any decision to purchase the Sheng Siong Shares should be made solely on the basis of information contained in the Prospectus and no reliance should be placed on any information other than that contained in the Prospectus.