Sheng Siong experienced a 15 percent drop in its share price across three trading sessions, hitting a one-year low after management highlighted rising promotional pressure and operating expenses. However, the grocer still delivered a 1.8 percent increase in third-quarter net profit while continuing its aggressive physical store rollout. Analysts from multiple research firms argue that structural store expansion and rising fresh food sales outweigh temporary headwinds like the tapering of government vouchers.
Key points
Brokerages view aggressive store openings and fresh food market share gains as primary en…: Brokerages view aggressive store openings and fresh food market share gains as primary engines for sustained earnings growth.
The retailer remains well positioned to capture demand from inflation-weary shoppers due…: The retailer remains well positioned to capture demand from inflation-weary shoppers due to its value-for-money reputation.
Market watchers consider government vouchers to be temporary cash substitutes that do not…: Market watchers consider government vouchers to be temporary cash substitutes that do not diminish the grocer's core operating strengths.
Sources checked by our analysis pipeline: 1
Sheng Siong’s share price tumbled 15 per cent over three trading sessions after it flagged a competitive grocery retail landscape in its third-quarter results.
SINGAPORE: Despite Sheng Siong’s share price tumbling 15 per cent over three trading sessions, some analysts remain optimistic about the supermarket operator’s outlook.
“Structurally, Sheng Siong is gaining market share in the grocery sector especially in fresh food sales,” Mr Paul Chew, head of research at Phillip Securities Research, told CNA on Tuesday (Nov 3).
Sheng Siong opened three stores in the third quarter ending Sep 30, raising the group's number of new stores for the year to seven. The group now operates a total of 92 stores in Singapore.
In Mr Chew's view, new store openings are the core driver of the company’s growth and share gains, and competition has retreated over the past two to three years.
CGS International Securities, too, likes Sheng Siong for its earnings growth, which is backed by new store expansion and strong operational execution, said analyst Meghana Kande.
CGS International Securities has maintained its “add” call on Sheng Siong,…
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