Sheng Siong shares continue last week’s slide, fall over 9% to hit one-year low

[SINGAPORE] Shares of supermarket operator Sheng Siong continued to fall, dropping as much as 9.4 per cent on Monday (Nov 2) morning.

The stock had closed down 4.6 per cent or S$0.13 at S$2.67 on Friday, after the company warned of intensifying competition and cost pressures in the coming year.

This is despite the group reporting a marginal 1.9 per cent year-on-year increase in its third-quarter net profit on Thursday evening.

At 9.01 am on Monday, the counter opened 7.1 per cent down at S$2.48, and fell further to S$2.42, down 9.4 per cent, as at 10.44 am. This was the lowest level for the stock since Nov 3, 2025, when it hit S$2.33 in intra-day trade.

The counter closed down 9.4 per cent or at S$2.42. No married deals were reported, ShareInvestor reported.

Financial results

The mainboard-listed supermarket operator had reported a net profit of S$44.6 million for the three months ended Sep 30, up from S$43.7 million in the corresponding year-ago period.

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Revenue for the quarter rose 6.2 per cent to S$441.5 million, from S$415.5 million a year earlier. The group attributed the increase to a larger store network in Singapore, as well as improvements in comparable same-store sales.

The stock’s decline comes after management said at its Q3 results briefing that the grocery retail landscape remained competitive, with sustained promotional activity potentially putting pressure on revenue and margins.

Competition could intensify further with the upcoming Johor Bahru-Singapore Rapid Transit System (RTS) Link, which is expected to begin operations in February 2027. The link could encourage more cross-border shopping and heighten price competition for selected packaged groceries and household products.

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Sheng Siong said it would adapt its strategies as developments surrounding the RTS Link unfold, in order to address the potential impact on its business.

Beyond competition, the group also flagged rising labour costs as another challenge, triggered by factors such as wage increases under the Progressive Wage Model and the National Wages Council’s guidelines for 2026 to 2027.

The group had raised the salaries of its retail workers in September last year to meet the Progressive Wage Model requirements for the retail sector.

What brokers say

On Monday, CGSI International cut its target price for Sheng Siong to S$3.10 from S$3.60, but kept its “add” rating. The move followed a 2 to 6 per cent reduction in its earnings forecasts for 2026 to 2028, reflecting slower sales growth in 2026 and higher operating costs in 2027 and 2028.

DBS Research Group maintained its hold and an unchanged target price of S$3 for the counter. DBS analyst Chee Zheng Feng said in a note on Friday that he expects Sheng Siong’s earnings growth to moderate further in the fourth quarter, as it comes down from a high base boosted by SG60 vouchers.

Another potential factor is the full-quarter impact of the Thomson Imperial Court store’s closure on Sep 25, and higher utility prices and rising staff costs could also weigh on the supermarket chain’s profitability, he added.

On Oct 30, HSBC issued a “reduce” call on the stock, while UBS maintained a “neutral” rating. On Oct 29, Citi also rated the stock “neutral”.