Sheng Siong, one of the latest arrival on traditional grocers in the Singapore market, had been delivering better than average earnings. Why is this so? This case provides an interesting comparison of Sheng Siong, a largely domestic focussed, single product company, against Dairy Farm, a multi-national player in the supermarket business in Asia, and NTUC FairPrice, a co-operative. Students will learn how to make comparisons across three different formats.
Sheng Siong, one of the latest arrival of traditional grocers in the Singapore market, had been delivering better than average earnings. Why is this so? Would it be able to sustain its performance in an environment of intensifying competition, driven by new entrants and disruptive forces? What business adjustments does it need to make? Competitive advantages which had delivered in the past may be quickly eroded, and new ones need to be found, or current edges need to be sharpened.
Alan Wong, an intern at Gem Asset Management, was pleasantly surprised when, as per his supervisor's instructions, reviewed the stock multiples (P/E, P/Sales, P/Book Value, and EV/EBITDA) of healthcare stocks listed on the Singapore Exchange (SGX). He recalled from his Equity Analysis 101 class at business school that the stock valuation metrics of companies in the same industry tended to trade within a narrow range. But certain stock valuation metrics of Healthway Medical Corporation appeared attractive in relation to SGX-listed peers. Alan performs the Du Pont analysis and financial statement analysis to ascertain if the Healthway stock was indeed attractive against the backdrop of its performance. Did the conclusions of his analysis support his initial impression?
Biosensors International Group (BIG), a biotechnology company listed in Singapore Exchange, acquired JW Medical Systems Ltd in 2011. This resulted in a significant increase in reported goodwill and other intangible assets. On 2 July 2012, Matthew Tay, an analyst with MMB Ltd (an equity research company in Singapore), sat staring at the balance sheets of BIG. The sum total of intangible assets and goodwill constituted 62% of total assets compared to 4% the year before. He knew that the huge increase was due to the acquisition of JW Medical Systems in 2011. He wondered what these intangible assets and goodwill represented, how they were accounted for and how they should be interpreted. This case study deals with the valuation and the impairment testing of intangibles (including goodwill) reported in the financial statements of BIG, and describes the acquisition transaction and BIG's post-acquisition financial position.