As the Covid-19 pandemic tapers down and Singapore moves ahead towards an endemic, consumers have stopped panic buying and are happily going out for their meals. While most analyst can see this as a negative for Sheng Siong, as that would mean less consumers in supermarkets and smaller basket sizes, RHB Group Research believes that the dependency on supermarkets is not over.
RHB analyst Jarick Seet believes that Sheng Siong is a beneficiary of the current rising inflation. Consumers may release some pent-up demand of dining out, but after that the reality of inflation sets in and it is back to the regular programme.
RHB Group Research hence has upgraded its call on Sheng Siong to “buy” from “neutral” with a higher target price of $1.78 from $1.51 previously. He believes that the stock is well-positioned as a “value-for-money” supermarket chain and that will be its selling point to be a key beneficiary of this normalisation. He also views the stock as a defensive option, especially in such a volatile market condition.
