\n<\/p>\n
SINGAPORE: Despite Sheng Siong\u2019s share price tumbling 15 per cent over three trading sessions, some analysts remain optimistic about the supermarket operator\u2019s outlook.<\/span><\/p>\n \u201cStructurally, Sheng Siong is gaining market share in the grocery sector especially in fresh food sales,\u201d Mr Paul Chew, head of research at Phillip Securities Research, told CNA on Tuesday (Nov 3).<\/span><\/p>\n Sheng Siong opened three stores in the third quarter ending Sep 30, raising the group’s number of new stores for the year to seven. The group now operates a total of 92 stores in Singapore.\u00a0<\/span><\/p>\n In Mr Chew’s view, new store openings are the core driver of the company\u2019s growth and share gains, and competition has retreated over the past two to three years.<\/span><\/p>\n CGS International Securities, too, likes Sheng Siong for its earnings growth, which is backed by new store expansion and strong operational execution, said analyst Meghana Kande.<\/span><\/p>\n CGS International Securities has maintained its \u201cadd\u201d call on Sheng Siong, while Phillip Securities has a \u201chold\u201d position.<\/span><\/p>\n RHB Singapore\u2019s senior research analyst Alfie Yeo has a \u201cbuy\u201d call on the stock.<\/span><\/p>\n \u201cWe believe that (Sheng Siong Group\u2019s) share price can continue to increase if its earnings growth persists,\u201d said Mr Yeo.<\/span><\/p>\n The decline in Sheng Siong\u2019s share price began on Friday after the company reported its third-quarter results, flagging a competitive grocery retail landscape and sustained promotions that pressure revenue and margins.<\/span><\/p>\n The management also highlighted rising costs due to wage increases and higher diesel prices, and the upcoming impact of the Johor Bahru-Singapore Rapid Transit System Link (RTS), that could intensify price competition.\u00a0<\/span><\/p>\n However, it added that the company is well-placed to weather <\/span>geopolitical uncertainties<\/span> and disruptions as well as potential competition from the RTS Link, as “consumers are expected to remain value-conscious amid elevated living costs”.<\/span><\/p>\n Net profit increased 1.8 per cent from a year ago.\u00a0<\/span><\/p>\n The stock closed 4.6 per cent lower on Friday, followed by 9.4 per cent on Monday.<\/span><\/p>\n On Tuesday, the stock dipped another 2.5 per cent lower, closing the day at its lowest in a year.<\/span><\/p>\n OCBC equity analyst Chu Peng said the sell-off appears to be driven by a softer outlook for next year, rather than the results for the third quarter.<\/span><\/p>\n \u201cInvestors are pricing in the risk of slower store expansion, higher electricity and labour costs, and the resulting pressure on margins,\u201d she said.<\/span><\/p>\n<\/div>\nWELL-POSITIONED DESPITE GLOOMY OUTLOOK<\/span><\/h2>\n
\n
\n
Read Full Article At Source <\/a>
\n