Broker: CGS International
Date of Report: May 2, 2025

Sheng Siong Group: Riding a Steady Uptrend Amid Singapore’s Retail Resilience

Market Overview: Rebounding Optimism Fuels Global Equities

The global financial landscape is experiencing a renewed surge in risk appetite, largely propelled by strong tech earnings and shifting expectations around US tariffs. Wall Street’s confidence has returned, with the S&P 500 rallying for eight consecutive sessions—its longest streak since August. The Nasdaq 100 also notched a 1.1% gain, buoyed by stellar results from Microsoft and Meta Platforms. Hopes for easing US restrictions on Nvidia’s sales to the UAE added further momentum, pushing tech shares higher.

Treasury yields have edged up, with the 10-year rate stabilizing at 4.21% as investors moderate their bets on US rate cuts amid robust factory data. The US dollar also firmed on news that Donald Trump’s administration initiated tariff talks with China. Much of the current market optimism is anchored in expectations that trade negotiations will offer relief from the high tariffs first introduced in April. Investors now turn their gaze towards upcoming earnings from Apple and Amazon, alongside the week’s crucial US jobs report.

Sheng Siong Group Ltd: Scaling Up with Resilience

Singapore’s retail sector continues to showcase its resilience, and Sheng Siong Group Ltd stands out as a major beneficiary. The latest results underline a robust uptrend, supported by both expansion and operational strength.

Financial Performance: Beating Estimates with Solid Growth

• 1Q25 Profit After Tax and Minority Interests (PATMI): S\$38.6 million, up 6% year-on-year. This figure slightly outpaces the forecasted S\$36 million, primarily driven by new store sales growth of 6% year-on-year.
• Store Expansion: The group anticipates opening 10 new stores in FY25, continuing its aggressive expansion strategy.
• Profitability Outlook: While overhead costs from new store openings may exert near-term pressure, these are expected to be offset as revenue from new outlets ramps up.
• Recommendation: The stock is rated as “Add” with a target price (TP) maintained at S\$1.90, based on a 19x FY26F price-to-earnings ratio. Steady earnings growth is forecasted for FY25F to FY27F.

Technical Analysis: Bullish Momentum Remains Intact

Sheng Siong’s share price action continues to impress, following a consistent uptrend since July 2024. The latest technical signals point to continued strength and further upside potential:

• Current Price: S\$1.76
• Entry Levels: S\$1.76, S\$1.68, S\$1.62
• Support Levels: S\$1.68 (Support 1), S\$1.57 (Support 2)
• Stop Loss: S\$1.56
• Resistance Levels: S\$1.77 (Resistance 1), S\$1.90 (Resistance 2)
• Target Prices: S\$1.90, S\$2.00, S\$2.20, S\$2.40

Key Technical Insights

• Sheng Siong has sustained a steady uptrend since July 2024.
• A bullish close above the key resistance-turned-support at S\$1.70 marked a decisive new uptrend.
• Bullish flag formation signals further upward continuation.
• Ichimoku indicators confirm a strong bullish trend.
• The Stochastic Oscillator remains elevated, indicating persistent bullish momentum.
• The 23-period Rate of Change (ROC) has broken above the zero line, confirming positive momentum.
• Directional Movement Index (DMI) affirms the trend’s bullish strength.
• Volume expansion remains healthy, supporting the uptrend.

Company Overview: Sheng Siong Group at a Glance

Sheng Siong Group Ltd is a leading Singapore-based grocery retailer, operating a wide network of stores across the country. The chain offers fresh and chilled produce, seafood, meats, vegetables, processed and packaged foods, as well as general merchandise, toiletries, and essential household items.

Sector and Stock Rating Methodology

• Stock Ratings:
  • Add: Total return expected to exceed 10% over the next 12 months.
  • Hold: Total return between 0% and +10% over the next 12 months.
  • Reduce: Total return expected to fall below 0% over the next 12 months.
• Sector Ratings:
  • Overweight: Positive absolute recommendation on a market cap-weighted basis.
  • Neutral: Neutral absolute recommendation on a market cap-weighted basis.
  • Underweight: Negative absolute recommendation on a market cap-weighted basis.
• Country Ratings:
  • Overweight: Position above market weight relative to benchmark.
  • Neutral: Position at market weight relative to benchmark.
  • Underweight: Position below market weight relative to benchmark.

As of March 31, 2025, the broker’s coverage distribution is as follows:

Coverage includes 551 companies for the quarter ended March 31, 2025.

Conclusion: Sheng Siong Positioned for Continued Growth

Sheng Siong Group’s performance and technical indicators point to a business on a strong growth trajectory. With double-digit store expansions planned for FY25, healthy revenue growth, and robust technical signals, the group is well-poised to capitalize on Singapore’s resilient retail landscape. Investors seeking exposure to the local consumer sector may find Sheng Siong an attractive proposition, especially with a clear uptrend and a well-supported price target of S\$1.90.