In his July 2 report, Yeo notes that Sheng Siong has already opened two new outlets as of 1Q2025, with six other outlets expected to be opened by 3Q2025. Four more are awaiting tender results, he adds, which means that Sheng Siong would have opened at least eight new outlets in 2025. “We expect the higher store count from new outlets to continue driving Sheng Siong’s earnings growth going forward,” says Yeo.
The analyst’s target price increase also comes after Sheng Siong’s share price outperformed. Since the start of the year, the group’s share price has gained 14%, outperforming the benchmark Straits Times Index (STI). Since Yeo’s last report in early May, Sheng Siong’s share price has risen by approximately 6%.
At the time, Yeo said that a global trade war would have added uncertainty to the market, causing investors to shift towards consumer staples. He reiterates that the Singapore domestic business has limited direct exposure to the uncertainties of the global trade war.
“We believe the firm’s share price performance may have reflected a more risk-off stance by investors in their strategy to go overweight on defensive plays, including Sheng Siong,” Yeo writes.
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Favouring Sheng Siong for its earnings growth momentum, attractive valuation, strong cash flow generation, stable balance sheet, and good dividend payout, Yeo has raised his FY2025 earnings by 4% and 6% for FY2026 and FY2027, respectively.
Having factored in a higher store count assumption from three to eight by the end of this year, Yeo has also lifted his revenue estimates by 2% for FY2025 and 5% each for FY2026 to FY2027, representing the partial year contribution for this year and the full 12-month contribution for the subsequent years for the new outlets. Yeo’s gross profit margins are lifted as well.
Following his higher estimates, Yeo now projects Sheng Siong’s recurring net profit to be at $150 million, $159 million and $165 million respectively for FY2025 to FY2027. Sheng Siong’s financial year ends in December.
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With the new target price, Sheng Siong’s recurring P/E ratio is at 18.77 times in FY2025, and 17.66 times and 17.05 times in FY2026 and FY2027, respectively.
Key downside risks include slower-than-expected store openings, lower sales demand and psf traction, and the inability to maintain gross profit margin at current levels.
“However, we expect Sheng Siong’s performance to remain resilient as it targets the mass market value segment, which will enjoy the effects of downtrading in a soft consumption environment,” Yeo says.
In their July 4 report, Kande and Lim also expect Sheng Siong to benefit from market share gains resulting from its new stores and the government’s community development council (CDC) vouchers.
Of the group’s six store wins announced in its 1QFY2025 results, the analysts noted that Sheng Siong’s three stores — Tengah Garden, Sumang Walk and Kinex Mall — were “fully stocked” and had “busy evening footfall”, while the three remaining outlets at Punggol Central, Punggol East and Cathay Mall, appear to be on track to open by July to August this year.
“In 1QFY2023–1QFY2025, Sheng Siong’s sales growth outperformed the industry’s by four percentage points on average,” the analysts write.
“We think Sheng Siong could have gained further market share in 2Q2025 via nine new stores added since end 2Q2024 and differentiated CDC voucher strategy of weekly discounts on specific products for a lower minimum spend of $30 vs peers’ $60. This likely encouraged repeat visits and lifted basket sizes above Sheng Siong’s average sub-$30, in our view,” they add.
The analysts also view HDB’s new supermarket tenders for 2026 as a plus for the group. The units measure between 5,400 sq ft to 9,700 sq ft, which is similar to Sheng Siong’s typical store sizes. As such, Kande and Lim believe Sheng Siong will bid for these three sites, which are expected to be up for tender from March to June 2026, according to HDB.
They forecast 10 store openings for FY2025 and five for FY2026.
