- We initiate coverage of Sheng Siong with a BUY and DCF-based target price of S$2.30 (7.3% WACC, 1.7% LTG). Our target price implies 23x/21x 2025/26 P/E.
Market share gains & upper tier growth profile.
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- E-grocery unit economics remain unfavourable while dining habit change is gradual and as such is not disrupting. With slight operating leverage support, we estimate Sheng Siong's net profit after tax (NPAT) to grow at 8% CAGR which is highly defensible and in the upper-tier of domestic names/regional peers.
Competitor shake-up opens growth path.
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- In the past 3 years, Sheng Siong has gained 2.7ppt in revenue share and could benefit further if Macrovalue prioritises Cold Storage over Giant due to capital constraints. Giant’s focus on the mass market segment means its ongoing rationalization is likely to benefit Sheng Siong, which targets a similar customer base. Our mapping shows a 68% chance of Sheng Siong gaining over NTUC from potential Giant closures.
- Sheng Siong remains focused on expansion, opening 6-10 stores in 2024/25. We expect Sheng Siong to add 5-6 new stores in 2026–27, partially helped by Giant rationalization.
Limited leakage to e-grocery, shifting dining habits.
- Read more at SGinvestors.io.
