DAIRY FARM INT'L HOLDINGS LTD (SGX:D01)
SHENG SIONG GROUP LTD (SGX:OV8)
KOUFU GROUP LIMITED (SGX:VL6)
JUMBO GROUP LIMITED (SGX:42R)
BREADTALK GROUP LIMITED (SGX:CTN)
Singapore Consumer - Retail Sales Shifting To Supermarkets
- New COVID-19 circuit breaker measures will lead to even stronger supermarket sales.
- Spending on grocery food items to remain robust as more of Spore’s workforce and students stay home.
- February retail sales already showing a shift from discretionary to staples especially supermarkets.
- Maintain positive stance on supermarkets and avoid higher end-restaurants.
New COVID-19 measures bode well for supermarkets and mass market food services.
- With the circuit breaker measures announced, non-essential workplaces have been ordered to close from 7 April to 4 May to help to contain the spread of COVID-19. Food establishments and hawkers will remain open but only for takeaway or delivery services. This is positive for supermarkets and affordable mass market foodservices outlets. As people are encouraged to stay home as far as possible, we expect retail spending on food staples to strengthen further.
Supermarket sales to continue to be brisk after strong showing in Feb.
- Retail sales in February declined by 8.6% y-o-y (-10.2% excluding motor-vehicles). Supermarkets bucked the trend, growing strongly by 15.5% y-o-y. Discretionary sales plunged, with sales for watches & jewellery, department stores, and apparel & footwear falling between 23-41% y-o-y.
Closure of workplaces and schools to increase demand for food at home.
- We see a stronger shift of food consumption at workplaces and schools to homes during the next month. This will result in brisk sales at grocery retailers, F&B foodservice outlets near residential areas, and online channels.
- On the other hand, this is a bane for restaurant operators as a significant number of Singapore’s workforce stays away from their workplace.
Reiterate BUY on supermarket plays and avoid restaurants.
- We reiterate our positive stance on supermarkets and buy recommendations on Sheng Siong (SGX:OV8) and Dairy Farm (SGX:D01), while avoiding higher end restaurant operator Jumbo Group (SGX:42R).
- Earnings risks prevail for Koufu (SGX:VL6) as outlets at Marina Bay Sands and Macau are exposed to tourists, even though footfall at heartlands continue to be decent.
- For BreadTalk Group (SGX:CTN), we urge shareholders to accept the offer given that about half of operating profit is from the Din Tai Fung restaurant franchies in Singapore, Thailand and the UK.
See attached PDF report for complete analysis.
Alfie YEO
DBS Group Research
|
Andy SIM CFA
DBS Research
|
https://www.dbsvickers.com/
2020-04-06
SGX Stock
Analyst Report
4.700
SAME
4.700
1.450
SAME
1.450
0.840
SAME
0.840
0.180
SAME
0.180
0.490
SAME
0.490
