As Singapore enters into Phase 2 (Heightened Alert) measures effective from May 16 to June 13, DBS Group Research analyst Alfie Yeo is recommending investors to stock up on supermarket counters.

In a report dated May 17, Yeo says he expects to see a shift in consumption from food and beverage (F&B) outlets to supermarkets as consumers are encouraged to stay home.

The shift, says Yeo, will last at least till June 13, delaying the normalisation of the F&B sector by 1.5 times.


For more stories about where the money flows, click here for our Capital section


“As this period coincides with the worst period for F&B during Phase 2 of the circuit breaker last year, we expect overall F&B demand to be similar in comparison with the same period last year. In phases 1 to 2 last year, F&B sales was around the $600 million per month levels. We now estimate F&B sales for May and June 2021 at $600-650 million level, flattish y-o-y,” he writes.

Want our latest Singapore corporate news stories for FREE

Follow our Telegram, Facebook for the latest updates round the clock

During the period of stricter measures, Yeo expects mass market F&B outlets to “hold up better” with restaurants and food caterers facing declines.

Citing numbers from the circuit breaker in 2020 as examples, restaurants performed poorly while smaller establishments such as foodcourt stalls, kiosks, takeaway outlets and fast food establishments “held up well” during phases 1 and 2 of the circuit breaker.

“We see a slight sequential uptick for supermarkets in May and June,” he says.

Yeo says he continues to be “positive” on grocery retailers such as Sheng Siong Group and Dairy Farm on higher anticipated supermarket sales in May and June.

He also remains positive on Koufu as “mass market F&B recovery is on the cards albeit a slight delay”.

Unsurprisingly, Yeo is negative on Jumbo as it is the most impacted due to dine-in restrictions, as well as the lack of tourists during the period.

Yeo has given “buy” calls for Sheng Siong, Dairy Farm and Koufu with target prices of $1.77, US$5.02 and 77 cents respectively. He has, on the other hand, pegged Jumbo at “fully valued” with a target price of 21 cents.

As at 1.13pm, shares in Sheng Siong, Dairy Farm and Koufu are trading at $1.63, US$4.35 and 63.5 cents respectively, while Jumbo is trading at 33 cents.


See: DBS positive on CDG, Koufu, Sheng Siong and Dairy Farm on easing of measures