CGS International
Date of Report: September 26, 2025
Sheng Siong Group’s S$520 Million Warehouse Investment: What It Means for Singapore’s Retail Sector and Key Peer Comparisons
Sheng Siong Group Embarks on Major Expansion with New S\$520 Million Warehouse
Sheng Siong Group (SSG) has announced a transformative S$520 million investment in a new warehouse, distribution center, and headquarters in Sungei Kadut. This strategic development is set to redefine the scale and efficiency of its retail operations in Singapore, with the facility scheduled for completion in 2029 and positioned to support rapid store network expansion.
Key Highlights of Sheng Siong’s Growth Initiative
- Investment Scale: The new project’s S\$520 million price tag is significantly higher than the approximately S\$80 million spent on the group’s current Mandai Link facility, reflecting a 2.5x increase in land area, enhanced technological capabilities, and elevated construction costs.
- Capacity Expansion: The new warehouse will support at least 40 additional stores beyond the current 83 as of Q3 2025, allowing SSG to potentially reach 120 stores by 2031, well ahead of initial management guidance.
- Funding Approach: SSG plans to fund the majority of this capital expenditure through its robust cash reserves, with only 10-20% expected to come from debt. This prudent funding structure is projected to have a limited 2% impact on net profits in FY26F-27F.
- Profitability Impact: Forecasted net profit CAGR stands at a healthy 6% from 2024 to 2031, underpinned by sustainable growth and operational leverage from the new facility.
- Market Outlook: The stock is rated ‘Hold’ with a target price of S\$2.21, reflecting a modest 4.7% upside from the current price of S\$2.11.
Financial Performance and Forecasts: Sheng Siong Group
| Metric |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Net Revenues (S\$m) |
1,429 |
1,516 |
1,599 |
1,659 |
| Gross Profit (S\$m) |
435 |
473 |
502 |
523 |
| Net Profit (S\$m) |
138 |
143 |
151 |
161 |
| Core EPS (S\$) |
0.09 |
0.10 |
0.11 |
0.11 |
| Core EPS Growth (%) |
— |
3.70 |
6.10 |
6.20 |
| FD Core P/E (x) |
22.25 |
20.97 |
19.74 |
— |
| Recurring ROE (%) |
25.6 |
25.2 |
24.8 |
— |
| DPS (S\$) |
0.067 |
0.071 |
0.075 |
— |
| Dividend Yield (%) |
3.15 |
3.34 |
3.55 |
— |
Investment Rationale and Risks
Upside Potential:
- Accelerated store expansion beyond forecasts could drive stronger-than-expected earnings growth.
- Margin improvements from operational efficiencies in the new warehouse may enhance profitability.
Risks:
- Labour market constraints could increase frontline staff costs.
- Intensifying competition in the grocery sector may pressure pricing and margins.
Peer Comparison: Regional Retail Players
The following table benchmarks SSG against key regional retail and grocery peers, highlighting metrics such as P/E, EPS CAGR, dividend yield, and ROE.
| Company |
Ticker |
Rec. |
Price (lcl curr) |
Target Price (lcl curr) |
Market Cap (US\$m) |
P/E CY25F |
P/E CY26F |
2-yr EPS CAGR (%) |
P/BV (x) CY25F |
ROE (%) CY25F |
Dividend Yield (%) CY25F |
| DFI Retail Group |
DFI SP |
Add |
3.16 |
3.45 |
4,278 |
16.2 |
15.6 |
16.4 |
N/A |
95.5 |
17.3 |
| Sheng Siong Group |
SSG SP |
Hold |
2.11 |
2.21 |
2,455 |
22.2 |
21.0 |
6.7 |
5.49 |
25.0 |
3.2 |
| Sun Art Retail Group |
6808 HK |
Hold |
1.86 |
2.20 |
2,281 |
28.9 |
21.5 |
N/A |
0.71 |
2.6 |
7.4 |
| Yonghui Superstores |
601933 CH |
Hold |
4.81 |
5.20 |
6,123 |
N/A |
168.0 |
N/A |
11.78 |
-2.4 |
6.2 |
| MINISO Group Holding |
9896 HK |
NR |
44.44 |
N/A |
7,097 |
18.9 |
14.6 |
N/A |
5.82 |
23.9 |
2.8 |
| Sa Sa International Holdings |
178 HK |
NR |
0.65 |
N/A |
259 |
26.0 |
14.7 |
10.1 |
N/A |
9.5 |
4.9 |
| Chow Tai Fook Jewellery |
1929 HK |
NR |
15.43 |
N/A |
19,563 |
26.2 |
17.3 |
21.3 |
5.41 |
27.7 |
4.1 |
| Cafe de Coral Holdings |
341 HK |
NR |
6.45 |
N/A |
481 |
16.1 |
11.3 |
12.5 |
1.29 |
10.4 |
6.2 |
| China Tourism Group Duty Free |
1880 HK |
NR |
62.05 |
N/A |
20,125 |
27.2 |
22.6 |
9.6 |
2.06 |
7.7 |
1.8 |
| 7-Eleven Malaysia Holdings |
SEM MK |
Hold |
2.00 |
1.98 |
527 |
27.3 |
23.3 |
23.8 |
5.06 |
18.9 |
1.8 |
| Aeon Co M Bhd |
AEON MK |
NR |
1.3 |
N/A |
433 |
11.5 |
10.8 |
14.7 |
0.90 |
7.9 |
3.8 |
| Ramayana Lestari Sentosa |
RALS IJ |
NR |
392 |
N/A |
166 |
7.7 |
7.0 |
2.6 |
N/A |
8.6 |
13.7 |
| Aspirasi Hidup Indonesia |
ACES IJ |
NR |
422 |
N/A |
430 |
8.9 |
7.7 |
2.6 |
1.07 |
12.3 |
7.9 |
| Mitra Adiperkasa |
MAPI IJ |
NR |
1,135 |
N/A |
1,122 |
9.7 |
8.2 |
13.6 |
1.41 |
15.2 |
1.2 |
| Industri Jamu Dan Farmasi Sido Muncul |
SIDO IJ |
Hold |
540 |
510 |
967 |
15.3 |
14.5 |
-4.4 |
4.66 |
30.8 |
N/A |
| Puregold Price Club |
PGOLD PM |
Hold |
42.00 |
42.00 |
2,082 |
10.4 |
9.4 |
10.9 |
1.17 |
11.5 |
N/A |
| Robinsons Retail Holdings |
RRHI PM |
Add |
35.55 |
65.00 |
675 |
7.1 |
6.5 |
11.4 |
0.52 |
7.8 |
N/A |
| CP All |
CPALL TB |
Add |
47.75 |
61.50 |
13,223 |
15.4 |
14.1 |
14.2 |
3.01 |
20.1 |
N/A |
| Berli Jucker |
BJC TB |
Add |
20.20 |
22.00 |
2,510 |
17.3 |
15.0 |
12.1 |
0.66 |
3.8 |
N/A |
| Home Product Center |
HMPRO TB |
Add |
7.45 |
7.90 |
2,996 |
16.0 |
14.7 |
5.8 |
3.57 |
21.9 |
N/A |
Key Takeaways: Regional Grocery and Retail Sector Averages
- Singapore Grocery Retail: Average P/E stands at 19.2x (CY25F), dividend yield of 10.2%, and average ROE of 60.2%.
- Hong Kong/China Retail: Higher P/E at 23.9x and an average dividend yield of 4.8%.
- Malaysia Retail: Average P/E of 19.4x and dividend yield of 2.8%.
- Indonesia Retail: Lower average P/E at 10.4x but higher average dividend yield at 7.6%.
- Philippines Grocery Retail: Attractive P/E of 8.7x with 11.2% EPS CAGR.
- Thailand Grocery Retail: 16.2x P/E and 10.7% EPS CAGR.
Sheng Siong’s Financial Health and Capital Structure
Sheng Siong’s balance sheet remains a pillar of strength, with a net cash balance of S$367 million as of June 2025 and annual operating cash flows around S$200 million. The group aims to fund most of its warehouse investment internally, ensuring minimal dilution or financial strain.
| Balance Sheet Metric |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Cash & Equivalents (S\$m) |
353.4 |
388.8 |
430.2 |
486.4 |
| Total Current Assets (S\$m) |
472.3 |
513.7 |
561.6 |
622.6 |
| Shareholders’ Equity (S\$m) |
534.9 |
577.4 |
622.7 |
670.9 |
| Total Liabilities (S\$m) |
396.8 |
430.7 |
449.2 |
436.3 |
Sheng Siong: Shareholder Structure and Price Performance
- Major Shareholders: SS Holdings (29.9%), Lim Hock Chee (9.2%), Lim Hock Leng (9.1%)
- Market Cap: S\$3,172 million (US\$2,455 million)
- Free Float: 42.6%
- Recent Price Performance: 1-month: +2.9%, 3-month: +11.6%, 12-month: +40.7%
| Shareholder |
% Held |
| SS Holdings |
29.9 |
| Lim Hock Chee |
9.2 |
| Lim Hock Leng |
9.1 |
Conclusion: A Prudent, Ambitious Path Forward for Sheng Siong
Sheng Siong Group’s S$520 million warehouse investment marks a bold step in scaling its operational footprint and enhancing long-term profitability. With a strong balance sheet, disciplined funding strategy, and clear capacity for expansion, SSG is well-positioned to capture further market share in Singapore’s competitive grocery retail landscape. While the stock’s current valuation suggests limited near-term upside, its growth fundamentals and prudent capital management continue to make it a noteworthy player in the regional retail sector.
Sector Ratings and Recommendations Framework
- Add: Total return expected to exceed 10% over 12 months.
- Hold: Total return expected between 0% and +10% over 12 months.
- Reduce: Total return expected to fall below 0% over 12 months.
- Sector/Country Overweight: Above-market exposure recommended.
- Neutral: Market-weight exposure recommended.
- Underweight: Below-market exposure recommended.
