Sheng Siong, a prominent supermarket chain in Singapore, has announced an optimistic outlook for its earnings growth, driven by plans to increase its store count. The company has maintained its “BUY” recommendation, with a revised target price of S$2.12, up from S$1.98, reflecting a 13% upside and an approximate 4% yield. This decision comes as Sheng Siong anticipates a positive earnings trajectory for the fiscal years 2025 to 2027, supported by a larger store network.
The company’s earnings forecast has been adjusted upwards by 2% for 2025, 4% for 2026, and 4.5% for 2027, based on the assumption of a higher number of stores. This expansion is expected to bolster Sheng Siong’s earnings growth momentum, alongside its attractive valuation, strong cash flow generation, and stable balance sheet. The company also plans to roll its target price forward to a blended price-to-earnings ratio for the fiscal years 2025 and 2026.
Analyst Alfie Yeo highlighted Sheng Siong’s robust cash flow and good dividend payout as key factors in maintaining the “BUY” recommendation. The company’s strategy to expand its store network aligns with its goal of capitalising on improving consumption and government support measures aimed at countering inflation in Singapore.
In summary, Sheng Siong’s strategic focus on expanding its store network is set to drive its earnings growth in the coming years, offering a stable investment opportunity with a promising dividend yield.
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