Stocks to Watch
Sheng Siong
Revenue by quarter (in S$)
CDC voucher + CNY beneficiary
- We see 2 reasons to be optimistic about Sheng Siong’s 1Q24 revenue and earnings –
- Seasonal trend: While 4Q tends to be a weaker quarter due possibly to outbound travel among the local population, 1Q is the strongest thanks to Lunar New Year purchases. The year 2021 was an exception due to COVID movement measures
- CDC vouchers: Disbursement of $250 per household is likely to boost 1Q24 revenue. The amount this year is also $100 more than in 2023
- The $100 CDC voucher increase this year for supermarkets equates to $140m and 2% of the overall grocery market value
- As CDC vouchers can only be used offline, the vouchers could prompt a shift towards shopping at physical stores
- Sheng Siong will benefit as it has a very small online presence (1% of overall sales).
- Sheng Siong’s share price tends to be stable to positive in 1Q based on past trends, and we think the same should hold this year
- Support is at $1.55
- We currently have a Hold recommendation and $1.62 TP