CGS International
May 1, 2025
Sheng Siong Group: Scaling Up with Resilience – Detailed Analysis of Singapore’s Supermarket Powerhouse
Strong Start to FY25: Sheng Siong Delivers Robust Growth
Sheng Siong Group (SSG), a leading Singapore supermarket operator, has kicked off FY25 with impressive results. For the first quarter of 2025, SSG reported profit after tax and minority interest (PATMI) of S$38.6 million, marking a 6% year-on-year increase. This result slightly surpassed the estimated S$36 million expected by analysts, buoyed by strong new store sales growth of 6% year-on-year.
1Q25 revenue reached S$403 million, up 7% year-on-year, even as the national supermarket industry saw a 0.4% decline over the first two months of 2025.
Eight new stores opened since January 2024 contributed significantly to revenue growth.
Same store sales remained broadly flat year-on-year, attributed to normalization at mature outlets and lower average selling prices (ASPs) for fresh products.
Operating profit margin (OPM) was steady at 11.2%, as rising staff costs (+13% yoy) offset an 85 basis point gross margin expansion from an improved sales mix and higher wage credits.
Accelerated Store Expansion in 2025
Sheng Siong is ramping up its expansion strategy, targeting up to 10 new store openings in FY25—its highest since 2018. This aggressive growth comes after securing six new outlets in addition to two already launched in 1Q25. The new stores include:
Four HDB tender sites and two private mall units (KINEX and Cathay), ranging from 3,300 to 19,000 sq ft.
Scheduled openings are staggered from May 2025 through 3Q25.
Notably, four of these six new stores were previously operated by competitors, underlining an industry trend of store rationalization that may further consolidate SSG’s market share.
Management highlighted that attractive rental rates were secured for private mall leases, allowing for expansion into previously underserved neighborhoods. The company maintains its focus on the mass-market segment, with minor tweaks to the sales mix based on local demographics. Four more tenders are pending and could potentially increase the tally of new openings further.
Short-Term Profitability Pressures, Long-Term Growth Intact
While new store openings are expected to drive earnings growth in the medium term, they will likely exert pressure on short-term profitability in FY25 due to upfront staffing and rental expenses. Key insights from management and analyst revisions include:
Tight labor supply and limited foreign worker access continue to drive up staff costs.
EPS estimate for FY25 has been trimmed by 1% in anticipation of these new store-related expenses.
Meanwhile, FY26 and FY27 EPS forecasts have been raised by 2% and 5%, respectively, as operating leverage from the expanded store network is expected to kick in.
Target price remains at S$1.90, based on approximately 19x projected FY26 P/E, which is slightly below the five-year historical mean to reflect potential margin compression.
Re-rating catalysts: further increases in HDB new store tenders and potential government wage support.
Downside risks: continued tight labor market and intensifying price competition.
Current Valuation and Shareholder Information
Current share price: S$1.76
Target price: S$1.90 (8% upside)
Market capitalization: S$2,646 million (US$2,025 million)
Free float: 42.6%
Major shareholders: SS Holdings (29.9%), Lim Hock Chee (9.2%), Lim Hock Leng (9.1%)
| Year Ended Dec |
2023A |
2024A |
2025F |
2026F |
2027F |
| Revenue (S\$m) |
1,368 |
1,429 |
1,516 |
1,599 |
1,659 |
| Operating EBITDA (S\$m) |
192.5 |
198.9 |
218.2 |
236.0 |
249.7 |
| Net Profit (S\$m) |
133.7 |
137.5 |
142.6 |
151.3 |
160.7 |
| Core EPS (S\$) |
0.09 |
0.09 |
0.09 |
0.10 |
0.11 |
| Core EPS Growth |
0.26% |
2.90% |
3.70% |
6.10% |
6.20% |
| FD Core P/E (x) |
19.80 |
19.24 |
18.56 |
17.49 |
16.47 |
| DPS (S\$) |
0.063 |
0.064 |
0.067 |
0.071 |
0.075 |
| Dividend Yield |
3.55% |
3.64% |
3.78% |
4.01% |
4.26% |
| EV/EBITDA (x) |
12.08 |
11.54 |
10.36 |
9.40 |
8.66 |
| Net Gearing |
(65.3%) |
(65.6%) |
(67.0%) |
(68.8%) |
(72.2%) |
| P/BV (x) |
5.36 |
4.95 |
4.58 |
4.25 |
3.94 |
| ROE |
28.3% |
26.7% |
25.6% |
25.2% |
24.8% |
Peer Comparison: Regional Grocery and Retail Players
SSG stands out among its regional peers in terms of profitability and operational discipline. The following is a detailed comparison with other leading grocery and retail companies across Asia:
| Company |
Ticker |
Rec. |
Price (Local) |
Target Price (Local) |
Market Cap (US\$ m) |
P/E 25F |
P/E 26F |
2-Yr EPS CAGR (%) |
P/BV 25F |
ROE 25F |
Dividend Yield 25F |
| DFI Retail Group |
DFI SP |
Add |
2.53 |
2.71 |
3,425 |
12.9 |
12.3 |
17.3 |
5.94 |
45.6% |
4.5% |
| Sheng Siong Group |
SSG SP |
Add |
1.76 |
1.90 |
2,025 |
18.6 |
17.5 |
6.1 |
4.58 |
25.1% |
3.8% |
| Sun Art Retail Group |
6808 HK |
Add |
1.85 |
2.30 |
2,275 |
39.4 |
22.3 |
na |
0.76 |
1.9% |
1.0% |
| Yonghui Superstores |
601933 CH |
Hold |
5.16 |
5.80 |
6,441 |
63.9 |
51.2 |
na |
9.09 |
14.3% |
7.7% |
| MINISO Group Holding Ltd |
9896 HK |
NR |
34.90 |
na |
5,631 |
13.1 |
10.5 |
na |
3.44 |
26.4% |
3.8% |
| Sa Sa International Holdings |
178 HK |
NR |
0.59 |
na |
236 |
12.5 |
12.6 |
4.9 |
1.48 |
12.1% |
6.1% |
| Cafe de Coral Holdings Ltd |
341 HK |
NR |
7.13 |
na |
533 |
13.8 |
12.3 |
7.7 |
1.42 |
10.9% |
7.7% |
| China Tourism Group Duty Free |
1880 HK |
NR |
52.85 |
na |
17,817 |
20.7 |
17.4 |
16.6 |
1.76 |
9.6% |
2.6% |
Other notable regional comparisons include 7-Eleven Malaysia Holdings, Aeon Co Malaysia, Ramayana Lestari Sentosa (Indonesia), Mitra Adiperkasa (Indonesia), Puregold Price Club (Philippines), and CP All (Thailand), each offering various growth and yield profiles.
ESG and Sustainability Initiatives: A Key Differentiator
Sheng Siong has made significant strides in its ESG performance, which is reflected in its increasing market share and customer loyalty. Notable ESG highlights:
Enhanced focus on employee well-being and strong social practices.
Active diversification of product sourcing, supporting Singapore’s “30 by 30” vision (30% local nutritional needs met by 2030).
Initiatives in 2024 included a 1% counter-inflation discount on all in-store purchases between January and March, and a 4% special discount for senior citizens, extended through December 2025.
Energy intensity increased slightly to 0.276 megajoules per S$ revenue in FY24, and GHG emissions intensity rose to 0.065kg CO2e per S$ revenue.
All 75 stores have been retrofitted with LED lights, potentially reducing lighting energy consumption by up to 80%.
These efforts not only align with national food security and sustainability goals but also help mitigate future risks associated with global supply chain disruptions.
Financial Performance: By the Numbers
Key financial metrics underscore Sheng Siong’s operational strength and efficiency:
Operating EBITDA margin projected to rise from 13.9% in 2024 to 15.1% by 2027.
Net cash per share is expected to increase from S$0.24 in 2024 to S$0.32 by 2027.
ROE remains robust, though slightly moderating from 28.3% in 2023 to 24.8% in 2027 as the business scales.
Dividend payout ratio is consistently maintained at around 70%.
Balance Sheet Highlights
Total cash and equivalents set to grow from S$353.4 million in 2024 to S$487.2 million in 2027.
Shareholders’ equity is projected to rise from S$534.9 million in 2024 to S$670.9 million by 2027.
No debt is carried on the balance sheet, supporting a net cash position and strong financial flexibility.
Key Operational Drivers and Risks
Acreage additions are expected to remain high, with 39,900 sq ft added in 2025, 41,800 sq ft in 2026, and 20,000 sq ft in 2027.
Revenue growth is forecast at 6.14% for 2025, moderating to 3.75% by 2027 as the group consolidates its expanded network.
Operating leverage is anticipated to improve from FY26 as new stores mature.
Risks to watch include continued labor market tightness, potential for increased wage costs, and the threat of stiffer price competition in the supermarket sector.
Stock Rating and Investment Outlook
The stock retains an “Add” rating, with total expected returns (price appreciation and dividends) projected to exceed 10% over the next 12 months.
Sector weightings remain positive, with Sheng Siong well-positioned within the Singapore retail landscape.
Conclusion: Sheng Siong’s Growth Story Remains Intact
Sheng Siong Group continues to demonstrate resilience and operational excellence in Singapore’s competitive grocery sector. With a robust pipeline of new store openings, disciplined financial management, and a strong commitment to ESG and customer value, SSG is well-positioned for stable earnings growth through FY27. Investors should monitor ongoing labor market developments and competitive pressures, but the company’s fundamentals and strategic direction remain compelling for long-term growth.
For further details or professional advisory, readers are encouraged to consult with their financial advisors regarding Sheng Siong Group and the broader Singapore retail sector.
