SINGAPORE (June 17): As Singapore is expected to enter Phase 2 of the reopening of its economy on June 19, F&B players are poised to benefit from the increase in traffic flow, according to analysts.

This, however, comes at the expense of grocery retailers, which are expected to see less footfall at their respective supermarket outlets.

“With the sooner than expected implementation of Phase 2, we are now slightly more positive on consumption spending in 2H20,” DBS Group Research analysts Alfie Yeo and Andy Sim write in a note dated June 15.

“Reasonably, supermarket spending would be less robust without panic buying and consumers spending less time at home,” they add.

RHB Securities analyst Juliana Cai agrees, saying: “We expect to see some positive respite for the F&B players amid pent-up consumer demand and 2.5-months of cabin fever during the Circuit Breaker and Phase 1 reopening.”

“This should shift some of the food demand from grocery retailers back to foodservice,” she adds in a June 16 report.

As announced by the government on June 15, Phase 2 will allow the resumption of most activities, subject to some safe distancing measures.

All retail businesses may reopen physical outlets and F&B dine-ins will be allowed for up to five atable.

However, overseas travel and large-scale gatherings remain prohibited.

While Phase 2 should provide much needed cheer to the F&B industry, the recovery may be uneven.

For instance, RHB foresees popular F&B names and sub-sectors – like bubble tea stores – to enjoy a short-term spike in sales arising from knee-jerk demand.

However, others may not see a V-shape recovery.

This could be due to cautious consumers, who may not dine out as frequently as they did prior to the novel coronavirus (Covid-19) pandemic, RHB says.

Moreover, the continuation of work-from-home measures, and prohibition on large social gatherings and tourism inactivity could limit the recovery of F&B concepts and retail locations that rely on crowds, it adds.

Still, analysts are optimistic on some F&B players.

DBS has upgraded Koufu Group to a “buy” rating and raised its target price to 75 cents.

The brokerage has also raised its earnings forecast for the company by a marginal 1% to 5% for FY20-21 given that distancing measures and customer limits will still be in place.

“…Koufu operates in the mass market segment and will benefit from higher sales from more transactions as diners return to its foodcourts located in malls, schools and offices,” say Yeo and Sim.

However, DBS has maintained its “full valued” recommendation for Jumbo Group with a target price of 21 cents.

Although Jumbo may benefit from dine-in customers as well, the brokerage believes the pickup could be relatively slow due to its exposure to tourists and higher price point.