DBS, RHB raise Sheng Siong target prices on expansion runway, CGSI holds steady

[SINGAPORE] Supermarket operator Sheng Siong’s robust first-quarter results have prompted analysts at DBS Group Research and RHB to raise their target prices, driven by an improved margin outlook and a fertile environment for store expansion.

Sheng Siong reported a 12.6 per cent year-on-year rise in net profit for the first quarter of 2026 to S$43.4 million, on a 12.4 per cent growth in revenue. The top-line growth was largely fuelled by new store openings and healthy same-store sales growth supported by festive demand.

RHB maintained its “buy” rating and raised its target price from S$3.02 to S$3.45, while DBS maintained its “hold” and increased its target price from S$2.60 to S$2.80.

Still, CGS International (CGSI) did not raise its target price despite a positive call, leaving it at S$3.40.

Stronger performance to come

RHB in the Monday note outlined expectations for Sheng Siong to have stronger performance in upcoming quarters, fuelled by a full 12-month earnings contribution from the 12 new stores the group opened in FY2025.

Analyst Alfie Yeo noted that Sheng Siong has already secured three new outlets for the 2026 financial year and is awaiting the results for five other tenders. For the longer term, he highlighted that the company’s new distribution centre will eventually support more than 120 stores.

Additionally, the group’s diversified supply base mitigates the risk of major disruptions from the Middle East conflict, said Yeo, adding that suppliers have yet to raise prices.

Also positive on Sheng Siong, DBS marginally lifted its 2026 and 2027 earnings forecasts by 0.3 per cent and 3.9 per cent, respectively, to reflect stronger store expansion prospects and improved margin assumptions.

Analyst Chee Zheng Feng said he expects a “high likelihood” of store availability emerging from struggling competitors, noting that Hao Mart and Ang Mo could potentially relinquish stores, creating further expansion opportunities for Sheng Siong.

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However, he warned that earnings momentum is expected to moderate in the coming quarters. The strong first-quarter 2026 performance was partially lifted by the timing of Chinese New Year and SG60 vouchers.

Growth is projected to slow down sequentially as new store contribution moderates and high base effects emerge in the second half of the year, he said.

Potential cost pressures

Releasing its note a few days earlier on Apr 30, CGSI maintained its “add” rating and kept its target price unchanged.

While acknowledging the strong in-line first-quarter results, CGSI analysts Meghana Kande and Lim Siew Khee highlighted potential cost pressures.

Although suppliers have not implemented significant price increases yet, CGSI warned that sustained higher fuel and freight costs could raise sourcing costs for Sheng Siong in 2026.

Nevertheless, CGSI remained positive on the stock, noting that scale efficiencies should help cushion the impact of higher shipping costs. The brokerage said it continues to view Sheng Siong as a key beneficiary of consumers trading downwards for more value-for-money options in an inflationary environment.