"With the government now expecting inflation in 2026F to exceed its earlier 1-2% forecast, we believe consumers will increasingly gravitate to value-for-money options, benefitting Sheng Siong Group," state analysts Meghana Kande and Lim Siew Khee in their April 7 note.
Sheng Siong, as a leading supermarket chain operator in Singapore, has a reputation for its value offerings.
In the first two months of 2026, supermarket sales in Singapore was up 6% y-o-y, versus 4% y-o-y for the whole of 2025.
Sheng Siong was able to outpace overall industry growth by 6 percentage points in 2025 and Kande and Lim expect this momentum to continue was the company expands its network rapidly, with 16 new stores open since the second half of 2024.
"Coupled with sustained demand for value offerings, we see Sheng Siong’s strong revenue momentum extending into FY2026," they reasons.
In addition, they expect the company to enjoy better operating leverage and economies of scale, which can help offset some cost pressures.
Kande and Lim are standing by their earlier gross profit margin expansion of 50 basis points in FY2026 to FY2027.
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"We reiterate 'add' on Sheng Siong for its resilient demand profile and continued market share gains," state Kande and Lim, who have raised their FY2026 to FY2028 earnings estimates by 1% on the premise that per store sales will increase.
Their new target price of $3.40 is based on 28x FY2027 earnings, up from an earlier multiple of 25x, which is 3 sd above Sheng Siong's 10-year average.
The analysts believe this higher multiple is justified given how Sheng Siong is in a structurally better position in terms of store network size and rising market share compared to a decade ago.
"We think the market will continue to ascribe a premium to its defensive positioning amid expectations for prolonged macroeconomic weakness," they reason.
Re-rating catalysts include faster store openings and stronger margins.
On the other hand, downside risks: higher staff costs and stiffer price competition.
Sheng Siong Group shares as at 10.15 am, gained 3.37% to trade at $3.07.
