Maturing stores to offset Sheng Siong's losses from outlet closures

Nine outlets opened since 2015 are in the process of maturing.

Despite the closure of its two outlets in Woodlands and The Verge, Sheng Siong will be able to anchor its growth from the maturing of its nine outlets opened since 2015. According to RHB Research, the maturing of the said outlets could offset the loss of revenue due to the closure of the group's major outlets.

More so, the reopening of the Loyang Point outlet as well as the expansion of the Tampines Central Outlet will more likely provide a similar boost to Sheng Siong.

"We believe the gross margin expansion story for Sheng Siong remains intact. Currently, its distribution centre is only 75% utilised – this gives room for more bulk handling, moving forward. Moreover, given the soft consumer spending environment, we think the three big supermarket players (NTUC FairPrice, Dairy Farm and Sheng Siong) would be in strong position to squeeze suppliers for additional rebates," RHB noted.

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