Moreover, grocery sales could be supported by Singapore Budget 2024’s announcement on inflation offset measures such as the CDC vouchers.
However, January 2024 saw supermarket and hypermarket sales decline by 6.5% y-o-y, according to the Singapore Department of Statistic. Overall, sales of supermarkets & hypermarkets have seen a declining y-o-y trend since May 2022, normalising from its elevated sales during the Covid-19 period.
Meanwhile, shares in Sheng Siong have declined by about 4% ytd, likely due to concerns over its slower revenue growth and margin expansion in 4QFY2023 ended December 2023. The group has also renewed electricity contract for FY2024 at lower tariffs and continues to roll-out more self-checkout machines at its stores to improve labour productivity.
In FY2023, only two new stores were open, due to slower pace of tendering exercise for commercial units by the Housing Development Board (HDB). In early 2024, the group had already won two tenders. Coupled with a robust pipeline of 10 units up for tendering, the research team believes that Sheng Siong’s store opening will reaccelerate this year, reaching its target of opening at least three new stores in 2024.
See also: CGSI initiates coverage on ISOTeam, expects FY2025 patmi to triple y-o-y
As at 12.30pm, shares in Sheng Siong are trading at $1.54.
