Yeo notes that since the Lunar New Year in 2022 was in February, most of the consumption effect related to the festive season would have kicked in in January 2022.
Collectively, January (-0.8% y-o-y) and February (+12.7% y-o-y) retail sales for this year have improved y-o-y.
Supermarket retail sales normalised from levels recorded in January (-2.7% m-o-m) and February 2022 (-3.6% y-o-y) as Yeo has expected. The supermarket retail sales in February 2022 represented a high base, when limits were still imposed on group sizes and workplace capacities, before social distancing measures were lifted on Apr 26, 2022.
As such, Yeo believes that the supermarket retail sales base should normalise and come down from the high levels at around May this year.
Meanwhile, Yeo expects the improved 2023 Budget packages to help support Sheng Siong’s revenue. “We believe Sheng Siong’s revenue will be supported by the improved budgetary measures (GST Voucher Scheme (GSTV), Assurance Package (AP) scheme for all Singaporeans, and Community Development Council (CDC) vouchers),” says Yeo, as he expects that the vouchers and cash payouts to Singaporeans should shore up supermarket sales going forward.
On the other hand, the analyst notes that Sheng Siong has a strong supply of new outlets ahead. “We believe SSG is on track to achieve its target of two to three new outlets per year,” says Yeo.
On that note, the Housing Development Board’s (HDB) outlook for new supermarket leases in new and matured estates for the rest of 2023 now stands at six (at Tampines, Clementi, Bidadari, Eunos, Sengkang and Fernvale), with five planned for 2024.
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Sheng Siong has already successfully secured its bed for one new store in Jalan Satu and has continued to bid for more outlets since.
As at 3.15pm, shares in Sheng Siong are trading at $1.73.
