To The Moon

🌟🌟🌟The recent Trade Tariffs from the US have caused  bearish sentiments across the global markets.  In the midst of such volatility, Consumer Staples is one sector that will weather the storm much better than others.   In Singapore, Sheng Siong $Sheng Siong(OV8.SI)$  is the 3rd largest chain of supermarkets with 77 outlets island wide.

Sheng Siong is synonymous with offering value for money.  Since its founding in 1985 by the Lim brothers, Sheng Siong has grown from a small provision shop in Ang Mo Kio to a be a trusted name in the Singapore retail market, offering a wide range of affordable quality products which include fresh produce, groceries and household items. 

Sheng Siong has also expanded overseas with its first supermarket in Kunming China in 2017.  Since then it has increased its foothold to 6 outlets in China. 

In determining whether Sheng Siong is a Good Buy, let's check out its financial reports. 

For the Full Year (FY) 2024, Sheng Siong delivered another year of strong performance.  Revenue grew 4.5% year on year to SGD 1.4 billion. This was driven by the opening of new stores and growing contributions from comparable same stories. 

Gross Profit rose by 6.1%, supported by an improved sales mix, while gross margin expanded by 0.5% to 30.5%.  Despite rising operational cost, the Group's Net Profit increased by 2.6% to SGD 137.5 million compared to FY 2023.

In FY 2024, Sheng Siong opened 6 new stores, exceeding its annual target of at least 3 stores.  This brings the total store count to 77.

In November Sheng Siong completed the acquisition of Jelita Property Pte Ltd.  This was a strategic move that enabled the Group  to open an additional store, receive additional rental income and the opportunity of long term capital appreciation. 

In addition to that, Sheng Siong  launched a new store at Blk 181 Toa Payoh Central on December 2024.  The Group also opened a new store at Blk 161 Ang Mo Kio Avenue 4 in January 2025 and another on Blk 671 Edgefield Plains in February 2025.  

Sheng Siong's expansion strategy remains focused on leveraging the increasing supply of retail spaces in HDB estates to better serve residents' daily needs.

With the increase of Singapore's GST to 9% in January 2024, the rising cost of living concerns have impacted consumer spending patterns.  This has shifted consumer preferences towards a more value driven grocery shopping, leading to a significant increase in demand for Sheng Siong's budget friendly products and house brand offerings.

Sheng Siong has a laser focus on Affordability,  Quality and Excellent Service as the key tenets at the core of its business model.

To support customers, Sheng Siong has introduced a storewide 1% Counter Inflation Discount from 1 January to 31 March 2024, directly offsetting the GST increase.  Sheng Siong has also extended its 4% Senior Citizen Discount through to  the end of 2024,  demonstrating its commitment to support its customers by making daily essentials more affordable during challenging economic times.  The Group  has now extended the scheme to 31 December 2025.

It is not surprising that Sheng Siong has been voted Singapore's Best Customer Service (Supermarket) 2024/2025 by The Straits Times, attesting to its commitment to delivering a high level of customer service and service excellence.  Sheng Siong was also voted as one of Singapore's Best Employers 2024 by The Straits Times.

Sheng Siong is one of the key beneficiaries of CDC vouchers issued by the Singapore Government to help its citizens cope with the rising cost of living. 

Sheng Siong also pays dividends twice a year.  The current dividend yield is 3.88%.  Sheng Siong goes ex dividend on May 2 with a payment date of May 16 2025.  The Board of Directors have declared a final dividend of 3.20 cents per share.  With the interim dividend of 3.20 cents, the total dividend for FY 2024 is 6.40 cents, representing a dividend payout of 70% of the Group's Net Profit. 

I like Sheng Siong for its ability to consistently expand its store network and optimise pricurement strategies through digital transformation across its operations.   This has been instrumental in driving its revenue and margin growth. 

Sheng Siong has a solid track record in securing 44% of HDB store tenders over the past 5 years, ensuring sustainable growth.  Sheng Siong's effective sourcing capabilities enable it to keep prices competitive, strengthening its appeal among value conscious consumers. 

Financial Analysts are bullish on Sheng Siong with a Buy rating, Average Target price of SGD 1.86, an upside potential of 12% according to Tipranks. 

In volatile markets, I believe that Sheng Siong is a Good Buy as it ticks all the core fundamentals of a quality stock.  It is profitable, has a strong balance sheet and an excellent management team.  Sheng Siong is well positioned to capitalise on new opportunities and forthcoming HDB tenders will present further room for growth. 

Go Long Go Strong Go Sheng Siong 😍😍🇸🇬🇸🇬🇸🇬🌈🌈🌈💰💰💰

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