Sheng Siong Group - Maybank Kim Eng 2021-07-31: Best Days Are Over; Prefer A Promo Price

SHENG SIONG GROUP LTD (SGX:OV8) | SGinvestors.io SHENG SIONG GROUP LTD (SGX:OV8)

Sheng Siong Group - Best Days Are Over; Prefer A Promo Price


Initiate coverage on Sheng Siong Group with SELL




Industry becoming less favourable

  • Euromonitor projects supermarket sales to decline by 5% CAGR from 2020-2023E. This is because supermarket sales are likely to normalise in the near to medium term as consumers switch to eating outside. The high base sales effects and gradual easing of dining-out measures in 4Q21 due to acceleration of vaccination will drive the impending industry decline.
  • We believe Sheng Siong Group, being the second largest supermarket operator in Singapore, is vulnerable to such industry headwinds. At the same time, the pandemic has also accelerated food delivery, which could change consumers’ dining habits post-Covid.
  • Meanwhile, Sheng Siong's China store expansion plan is still at an early stage and China sales make up only 2% of group revenue. Therefore, we estimate revenue per sqft to taper to 6% CAGR to S$2,000 by FY23E from S$2,423 in FY20.

Fewer new store openings

  • New store opening has been a significant forecast Sheng Siong's FY22 earnings per share to decline 7% y-o-y.


Sell on strength; switch to re-opening plays






Kareen Chan Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-07-31
SGX Stock Analyst Report SELL INITIATE SELL 1.33 SAME 1.33



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