RHB Group Research is reiterating its “buy” recommendation on supermarket operator Sheng Siong with an unchanged target price of $1.87. Sheng Siong is also its preferred pick for retail staple food stocks.

Although Singapore’s Covid-19 situation has stabilised, analyst Juliana Cai continues to like this defensive stock, as she believes supermarket sales could remain elevated in FY2021, as long as the work-from-home (WFH) trend and travel restrictions stay in place.

Supermarket retail sales in Singapore have stabilised over September to November 2020 – after the initial m-o-m decline from June to August – as Singapore entered into Phase 2 of reopening its economy. But the retail sales for the September to November period was still about 20% higher than pre-pandemic levels.

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