He notes that supermarket sales rose 9.2% y-o-y in Jul– Aug 2025, well ahead of 1HFY2025’s 1.7% growth.
With 10 new stores added year-to-date, Sheng Siong has not only exceeded its own target of 8 new stores but is also outpacing competitors such as Giant and Cold Storage, which are scaling back.
Saifee, citing channel checks, is observing strong early traction at Sheng Siong's new Kinex and Cathay stores.
In contrast, nearby stores like CS@Plaza Singapura and CS@Joo Chiat or Giant@marine parade show "relatively muted" foot traffic.
The company is in the news recently for a $520 million distribution centre that will help support improvements in efficiencies and multi-year growth ahead.
Saifee estimates that the centre will increase Sheng Siong's annual depreciation and ammortisation costs by around $10 million.
This estimate is based on construction costs of $360 million, plant and machinery of $120 million, and land lease costs of $46 million, with useful lives ranging from 10-40 years.
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"The more automated facility is expected to boost operational efficiency, support store and stock-keep-unit growth, and reduce reliance on temporary warehousing during peak seasons, such as Chinese New Year and Hari Raya," he says.
He figures that the higher D&A costs will trim Sheng Siong's FY2027 and FY2028 net profit after tax by around 5%.
However, there's potential upside from the better efficiencies.
The stock is now trading at 20 x earnings, in line with peers. "Sheng Siong offers a superior growth and margin profile," says Saifee.
As at 9.49 am, Sheng Siong shares dipped 0.47% to trade at $2.13.
