Sheng Siong Raises Profit 12.6% as Analysts Lift Targets on Store Expansion Runway

Key facts

• Sheng Siong's Q1 FY2026 net profit rose 12.6% year-on-year to S$43.4 million.
• Revenue grew 12.4% to a record high, driven by new stores and festive same-store sales.
• RHB raised its target price from S$3.02 to S$3.45, maintaining a 'buy' rating.
• DBS increased its target price from S$2.60 to S$2.80, keeping a 'hold' rating.
• CGS International held its target price at S$3.40 despite a positive call.
• The group has secured three new outlets for FY2026 and is awaiting results for five other tenders.
• Sheng Siong's new distribution centre will eventually support more than 120 stores.
• DBS analyst Chee Zheng Feng expects a 'high likelihood' of store availability from struggling competitors Hao Mart and Ang Mo.

Record Quarter Lifts Profit and Revenue

a 12.6% year-on-year increase in net profit for the first quarter of FY2026, reaching S$43.4 million. Revenue climbed 12.4% to a record high, propelled by new store openings and robust same-store sales growth buoyed by festive demand. The strong performance has prompted analysts to revise their outlooks upward. RHB maintained its 'buy' rating and raised its target price from S$3.02 to S$3.45, while DBS kept its 'hold' rating but increased its target from S$2.60 to S$2.80. CGS International held its target price at S$3.40 despite a positive assessment.

Store Expansion Pipeline Drives Optimism

RHB analyst Alfie Yeo highlighted that Sheng Siong has already secured three new outlets for the 2026 financial year and is awaiting the results of five other tenders. The group opened 12 new stores in FY2025, which are expected to contribute a full 12 months of earnings in upcoming quarters. For the longer term, Yeo noted that the company's new distribution centre will eventually support more than 120 stores, providing a scalable infrastructure for continued growth. This expansion runway is a key factor behind the raised target prices.

Resilient Margins and Diversified Supply Chain

Sheng Siong's gross margin remained resilient despite global cost pressures, partly due to its diversified supply base. Yeo stated that the group's sourcing strategy mitigates the risk of major disruptions from the Middle East conflict, and suppliers have yet to raise prices. DBS analyst Chee Zheng Feng marginally lifted earnings forecasts for 2026 and 2027 by 0.3% and 3.9%, respectively, reflecting stronger store expansion prospects and improved margin assumptions. The company's cash position stood at S$461 million, providing ample firepower for further investments.

Competitive Landscape Opens Opportunities

Chee expects a 'high likelihood' of store availability emerging from struggling competitors, specifically naming Hao Mart and Ang Mo as potential sources of relinquished outlets. This could create further expansion opportunities for Sheng Siong, widening its competitive moat. The analyst noted that as weaker rivals retreat, Sheng Siong is well-positioned to capture market share. The company's ability to secure new stores and maintain margins in a challenging environment underscores its operational strength.

Outlook: Continued Growth Amid Caution on Valuation

While analysts are bullish on Sheng Siong's growth trajectory, some caution that the stock's valuation is already rich. CGSI held its target price steady, suggesting limited upside at current levels. However, the consensus remains positive, driven by the store expansion pipeline and resilient margins. Sheng Siong has stated it will keep prices affordable despite cost pressures from the Iran war, reinforcing its commitment to value-conscious consumers. The company's ability to balance growth with price stability will be key to sustaining its momentum.

The bottom line

• Sheng Siong's Q1 FY2026 net profit rose 12.6% to S$43.4 million on record revenue of S$12.4% growth.
• RHB and DBS raised target prices to S$3.45 and S$2.80 respectively, while CGSI held at S$3.40.
• The grocer has secured three new outlets for FY2026 and is bidding for five more, with a new distribution centre supporting over 120 stores long-term.
• A diversified supply base shields Sheng Siong from Middle East disruptions, and suppliers have not raised prices.
• DBS sees a 'high likelihood' of store availability from struggling competitors Hao Mart and Ang Mo, offering expansion opportunities.
• Despite strong fundamentals, valuation concerns persist, with CGSI keeping its target price unchanged.