​Maybank has initiated coverage on Singapore supermarket operator Sheng Siong Group with a "buy" rating and a target price of S2.30. The valuation implies price-to-earnings multiples of 23x for 2025 and 21x for 2026.

In a June 20 report, Maybank analyst Hussaini Saifee highlighted that DFI Retail Group's S$125 million sale of its Singapore food business to Malaysia's Macrovalue signals a strategic retreat from the local supermarket sector. This transaction, involving 48 Cold Storage and 41 Giant stores, creates significant market share opportunities for Sheng Siong.

Saifee projects Sheng Siong could achieve 6% compound annual revenue growth, outpacing the industry's 4% growth rate, through market share gains from DFI's restructuring. Net profit is expected to grow at an 8% CAGR, placing the company among Singapore's most resilient retailers.

The analyst noted Sheng Siong has already gained 2.7 percentage points of market share over three years and stands to benefit further if Macrovalue prioritizes Cold Storage over Giant due to capital constraints. With 68% of potential Giant store closures likely benefiting Sheng Siong rather than NTUC FairPrice, the company plans to open 6-10 new stores through 2025 and another 5-6 in 2026-2027.

Maybank sees limited threat from e-grocery competition, noting Singapore's online grocery penetration has plateaued at 80%. The report emphasizes Sheng Siong's competitive advantages including prices 10-21% below online grocers, fresh produce offerings, live seafood sections, and extended operating hours that drive strong foot traffic. With consumers cutting back on food delivery due to rising costs, traditional supermarkets are expected to maintain stable 3% annual growth in line with GDP expansion.

Sheng Siong soars 5.8% at 11:22 am, July 24th.