Introduction
This comprehensive analysis dives deep into the performance of Sheng Siong Group and examines its positioning among key industry peers within the retail and grocery sector. The report discusses detailed historical performance, current quarter results, store expansion strategies, future growth drivers, and pertinent valuation metrics. Alongside a dedicated review of Sheng Siong Group’s fundamentals, a detailed peer comparison highlights the salient features, investment ratings, and financial outlook for other listed companies in the region.
Sheng Siong Group: Corporate Overview and Recent Performance
Sheng Siong Group (SSG) is in the spotlight for maintaining a healthy store tender and expansion pipeline heading into FY25F. In 4Q24, the group recorded revenues of S\$351 million – a 6% year-over-year increase that met consensus expectations. However, net profit for the quarter registered at S\$29 million, slightly below expectations due to rising selling, general and administrative expenses driven by higher staff costs.
The report notes that while gross margins expanded by 10 basis points through an improved sales mix, increased overhead pressures were evident. Notably, same-store sales in 2H24 grew by 1.4% year-over-year with new store sales growth at 3.8% following the launch of six new stores during 2024.
Looking forward, SSG has opened two new stores year-to-date in 2025 and is actively awaiting outcomes from eight pending tenders. Four of these pending sites are on locations previously served by competitors, suggesting a potentially quicker revenue ramp-up due to reduced activation time. Additionally, with another unit slated for tendering by the Housing Development Board (HDB) by March 2026F, the pipeline indicates that approximately five new stores can be expected in FY25F.
Despite the expected pressure from elevated staff costs, the group is well-positioned to offset some of these challenges through a better sales mix focusing on higher margin fresh and house-brand products. Management highlighted modest improvements, with the share of fresh products now at high-40% of sales for FY24 and house brands rising to 8% compared to approximately 7% in FY23.
Investor sentiments remain positive as the report reiterates an Add recommendation based on SSG’s robust operational track record and profitable expansion outlook. The target price has been maintained at S\$1.90, up from a current price of S\$1.64, reflecting a 15.9% upside.
Financial Performance and Valuation
The detailed financial summary lays out revenue growth, margin evolution, and conservative revisions in net profit forecasts. Highlights include:
- FY24 net profit reached S\$138 million, just marginally below expectations.
- Core EPS projections remain stable at S\$0.10 for FY25F to FY27F with modest growth percentages.
- Key valuation multiples such as FD Core P/E, EV/EBITDA, and P/BV have been adjusted, reflecting a forward multi-year approach.
- The dividend yield is expected to gradually increase from 3.81% in Dec-23A to 4.36% in Dec-27F.
Additionally, the in-depth balance sheet review shows strong liquidity with rising cash reserves and stable liability management contributing to a net cash per share rising from S\$0.22 in Dec-23A to S\$0.32 in Dec-27F.
ESG and Energy Efficiency Initiatives
The report underscores SSG’s strategic commitment to sustainability. Emphasizing the rise in market share over the past four years, SSG has implemented initiatives to improve energy efficiency – all 69 stores have been retrofitted with LED lighting. Such measures are expected to reduce lighting energy consumption by up to 80%, contributing to better cost efficiency and an improved carbon footprint. In addition, the company is actively diversifying its product sourcing by partnering with local suppliers to promote the “made in Singapore” movement and align with Singapore’s “30 by 30” vision.
Peer Analysis: Comprehensive Overview of Listed Companies
The report also provides a robust peer comparison, offering insights into multiple players operating in the region. The analysis includes key valuation metrics, earnings estimates, and investment recommendations.
DFI Retail Group
Rating: Hold
Current Price/Target Price: 2.21 / 1.85
Market Cap: US\$2,992 million
The company maintains moderate growth projections with core EPS growth and a dividend yield of 4.5%. Despite stable fundamentals, the current outlook suggests a neutral recommendation as its performance situates it in line with market expectations.
Singapore Grocery Retail Simple Average
This peer group reflects an average target price of 15.2, with a forward P/E around 14.5 and average dividend yields at 7.0%. These benchmark figures provide a reference for investors evaluating the retail sector—offering context to Sheng Siong Group’s performance and valuation.
Sun Art Retail Group
Rating: Add
Current Price/Target Price: 1.78 / 2.30
Market Cap: US\$2,184 million
Sun Art is noted for its exceptionally high earnings growth, with a CY25F growth rate of 37.8% and a dividend yield that supports its aggressive expansion strategy. The recommendation to add reflects its potential for strong market performance.
Yonghui Superstores
Rating: Hold
Current Price/Target Price: 5.33 / 5.80
Market Cap: US\$6,657 million
Yonghui’s forward P/E and dividend yields are significantly robust, although higher multiples indicate some valuation concerns. The hold rating reflects balanced expectations, with solid fundamentals but a cautious outlook given the high valuation multiples.
MINISO Group Holding Ltd
Rating: Not Rated (NR)
Current Price/Market Cap: 39.60 / US\$6,363 million
MINISO’s metrics suggest mixed signals; growth prospects exist but the current data indicate an uncertain outlook, leading to a not rated status from the research team.
Sa Sa International Holdings Ltd
Rating: Not Rated (NR)
Current Price/Target Price: 0.64, with a market cap of US\$255 million
The company demonstrates modest performance with limited growth and slight changes in EPS estimates, resulting in a non-rated classification.
Chow Tai Fook Jewellery Group
Rating: Not Rated (NR)
Current Price/Target Price: 7.51
Market Cap: US\$9,642 million
Chow Tai Fook is renowned for solid operational performance with consistent returns, yet the valuation metrics have prompted the analysts to maintain a non-rated stance.
Cafe de Coral Holdings Ltd
Rating: Not Rated (NR)
Current Price/Target Price: 7.20
Market Cap: US\$537 million
Cafe de Coral’s earnings and operational margins are stable, however, market conditions have led to a conservative view with a not rated recommendation.
China Tourism Group Duty Free
Rating: Not Rated (NR)
Current Price/Target Price: 47.00
Market Cap: US\$17,110 million
With significant weight in the market, China Tourism Group shows robust scale and future dividend prospects though higher valuations and competitive pressures contribute to its NR status.
Regional and International Peers
The report extends its analysis beyond Singapore and Hong Kong, including selected companies in Malaysia, Indonesia, the Philippines, Thailand, and beyond. These include:
- 7-Eleven Malaysia Holdings: Rated Hold with a current price of 1.98 and a market cap of US\$494 million. Expected dividend yields and P/E ratios reflect bullish yet cautious market sentiment.
- Aeon Co M Bhd: Not Rated (NR) in a highly competitive sector, with moderate expectations set against industry benchmarks.
- Aspirasi Hidup Indonesia (ACES IJ): With an upward revision from 645 to 1,300, this company is recommended as Add, showcasing strong local market potential.
- Ramayana Lestari Sentosa (RALS IJ): Although not rated, its growth estimates and operational performance indicate steady prospects.
- Mitra Adi Perkasa (MAPI IJ): Also carrying an Add recommendation, signaling upbeat market outlook and consistent revenue performance.
- Puregold Price Club Inc (PGOLD PM): With an upward adjustment from 27.80 to 37.25 and a moderate market cap of US\$1,383 million, this peer is seen as attractive for growth.
- Robinsons Retail Holdings Inc (RRHI PM): An Add recommendation with rising target prices and significant upside potential noted in the analysis.
- CP All: Also carries an Add, reflecting its strong participation in the regional grocery retail segment.
- Other retail peers, such as Berli Jucker and Home Product Center (HMPRO TB), along with Thai grocery retail averages, further illustrate a diverse range of valuations and performance metrics that investors can compare against the leading players.
Each company in this sector is assessed based on metrics such as P/E ratios, dividend yields, market capitalization, EPS growth, and operational efficiencies. The detailed peer analysis provides an invaluable benchmark to understand the relative strengths and potential challenges across the retail landscape.
Conclusion
In summary, the report portrays Sheng Siong Group as a resilient operator in the competitive retail space with a promising pipeline and steady financial fundamentals. Underpinned by cautious yet optimistic earnings updates and prudent cost management, SSG’s forward outlook justifies an Add recommendation. The comprehensive peer analysis reveals a varied competitive landscape with a mix of hold and add ratings reflecting diverse growth expectations and valuation multiples.
The detailed comparisons among major players such as DFI Retail Group, Sun Art Retail Group, and Yonghui Superstores—as well as several regional names—provide a holistic view for investors seeking to understand how Sheng Siong and its peers are navigating market challenges and capitalizing on expansion prospects.
