- We view Sheng Siong Group (SGX:OV8) as a defensive play amid rising inflation and slower economic growth. We believe demand for groceries will continue to normalise in 2023, but could potentially be supported by a shift in consumption patterns with a focus on “value for money” due to inflationary pressures.
Operations in China continued to be profitable
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- As of 1H23, Sheng Siong’s operations in China continued to be profitable, supported by all four of its older stores. Sheng Siong sees strong growth prospects in its Chinese operations, though the margin profile is lower compared to its Singapore stores given its current size and scale in China.
Housing Development Board (HDB) lease tender delays
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- We now expect Sheng Siong to open only 2 new stores in Singapore this year (vs our previous forecast of 3 new stores) and 3 new stores in 2024.
Stable margin
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