Broker: CGS International
Date of Report: March 3, 2026
Excerpt from CGS International report.
Report Summary
- CGS International upgrades Sheng Siong Group (SSG) to “Add” with a higher target price of S\$2.97, citing stronger EPS estimates due to an expanded new store pipeline and improved gross margins.
- SSG’s FY25 results showed a 10% revenue increase and 80bp jump in gross margin to 31.3%, driven by new store contributions and operational efficiencies, despite higher staff costs.
- Management sees growth opportunities in both HDB and private malls, with a raised store opening forecast for FY26F/27F and full-year contributions from new stores supporting future sales growth.
- SSG is expected to achieve gross margin expansion of 50bp per annum through scale and procurement gains, offsetting staff cost pressures.
- Key catalysts for re-rating include faster store openings and stronger margins, with risks from higher staff expenses, stiffer price competition, and potential construction cost increases.
- Financially, SSG maintains strong net cash, high ROE, and a sustainable dividend yield, while also advancing ESG initiatives such as promoting local produce and energy efficiency.
- Compared to regional peers, SSG trades at a premium but offers robust growth, high returns, and stable dividend payout, supporting its investment case.
Above is an excerpt from a report by CGS International. Clients of CGS International can be the first to access the full report from the CGS International website: https://www.cgs-cimb.com
