This lady came out, guns blazing.

Can the Board explain why the 3 brothers got $8m each?

Yes, it seemed excessive, given that it was a $1.4 billion business. But what seemed even more non-kosher was that they were all brothers. So it seemed like they had been in cahoots to get the highest pay. But was it that excessive if they had gotten Sheng Siong this level of margins?

Well, for me, it wasn’t.

But it was a fair question.

Ms Tan Poh Hong replied that this was because of the larger number of stores they’d opened last year. At 12, this was significantly beyond the 3 to 5 they had targeted over the year. Therefore, the variable bonus granted was much higher than before.

Last year I gave $5m of my own money to…

But then came an interesting anecdote.

我们应该在哪里花钱？Where should we spend money?

在那些帮我们赚钱的人。On those that help us make money.

去年我用自己薪水，把50万寄去中国，为了他们的花红。So last year, I used $5m of my own money to pay for the supermarkets in China, and their bonuses.

That’s extraordinary. He didn’t need to do that. He could have just used his company’s money.

Yet Lim chose not to. Who cares if he earns $8m, if he’s this invested in his own business?

But CEO Lim also guided that over the coming year, they might not open as many stores. They were already due to close 2 when the lease expired. Later, when I asked why they were not renewing these stores, Lim added that it was because the landlords had other plans for the stores.

Can you sell Sheng Siong in Orchard?

But let’s study the 12 stores more closely. Were they really all that profitable?

We all know Sheng Siong for being the value-for-money option. Thus, for it to move into the Cathay, in glitzy Orchard, seems a bit of a stretch. After all, if you’re used to lelong your fish in Toa Payoh, how would you move to the upper class Orchard, where they don’t expect to be sold, or told, but only for you to be bold in introducing a fresh concept?

Well, Lim was confident of the Cathay’s prospects. He told me that if he wasn’t in Cathay, someone else would take it. Judging from the crowd, it looks like they are doing well enough.

One also knows that they price differently, according to the areas. For example, your bag of 24 Nescafe 3 in 1 sachets might be $6.70 in Bishan, but $7.50 in Orchard. It gives them more margin to play with. Of course, one would argue that the rent is higher.

Which does bring us to the next point.

Would Sheng Siong take over the Hao Marts and U Stars of Singapore?

I cheekily posed this question, knowing that rental was going up, and killing the smaller retailers without the economies of scale. Lim was tight-lipped, trotting out the same message as before.

人找你，跟你找人的时候，价钱不同。

It looks like Sheng Siong will continue waiting for the landlords to come to them, knowing their incredible attractiveness in pulling in footers to malls.

The one unsaid elephant in the room was the inevitable growth of Singapore’s population. That was why Sheng Siong was footing $520m to buy a 6 hectare site. That’s much bigger than the current 2.5 hectares they have, and it’s something that they are preparing for, in hitting 120 stores.

And what’s even smarter?

They are selling the 2.5 hectares back to JTC.

Redmart, look out, Lim is coming for you

The other reason was also because they were looking for an automated store that would help with the e-commerce. For the first time, Lim confessed that e-commerce was not as big as they’d like, and that he was personally looking at it.

Another complaint people raised was that they didn’t seem to take the RTS Link seriously. Lim had done the math, and promptly trotted out the numbers.

One hour 10,000 people.

Even if everyone goes there to buy groceries, it would be hard to imagine people traveling there and back for 2 hours just to get groceries they could get within 30 minutes, below their home.

Yes, you could save $10, but would that be worth the time? Not really.

That’s why it may not work that big of a threat, yet.

Why chase ROE?

Perhaps the best part of the meeting came at the last part, where Lim was explaining why he didn’t use debt.

有人问我为什么没有去借钱。如果借钱，那ROE可以40%。People ask why I don’t use debt.

我自己算，如果我把现金分多一点，为股息，ROE能70%！但为什么我要去追一个ROE呢？If I issue more cash as dividend, then my ROE can even be 70%. But why would I want to chase this number?

服务，品质，价格。我们只要专攻这三样，那之后就自然而然。

Service, quality, and price. As long as we focus on these three, the results will naturally follow.

That’s why Cold Storage and Giant failed. Because they trusted those men in suits, who tried to study NPATs, margins, and yields. They forgot the customer doesn’t give a damn whether your margin is 1% or 30%, as long as they get a good deal.

Screw those men in suits, trust the uncle on the shop floor.