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SINGAPORE (Oct 23): CGS-CIMB Research is maintaining “overweight” on the consumer staples sector after a recent visit to Habitat, honestbee’s tech-enabled grocery and dining destination in Pasir Panjang.
In a Tuesday report, analyst Cezzane See describes the online-to-offline (O2O) retail experience as “akin to shopping at an upmarket grocery store” – and says the move by honestbee proves that physical retail is still relevant despite the onset of the “new retail” phenomenon.
The way See sees it, Habitat could pose some competition for online food delivery and grocery players like Grabfood and Redmart, given the likelihood of this physical experiential presence fostering consumer awareness and loyalty.
She also likens the concept to Alibaba’s Hema supermarket, and says these concepts are evidence that brick-and-mortar retail will continue to exist, albeit not without innovation so as to remain relevant.
With the impending results release of Sheng Siong Group (SSG), which CGS-CIMB rates “add” with a target price of $1.26, See is estimating a 21.3% rise in y-o-y net profit for 3Q18 to $21.5 million on the opening of two new stores in July this year.
“SSG stands out with its ‘heartland’ consumer-driven supermarket focus and large scale, which makes it the least vulnerable to the rising e-commerce threat, in our view,” she notes.
See is however less positive on Dairy Farm International (DFI), which has been rated “hold” with a target price of US$9.55.
In her view, the group’s net profit is likely to stay weak for most of FY18F on sluggish margins, particularly in Southeast Asia after facing a tough trading environment in 3Q18.
“In Sept, a news article mentioned that DFI is reviewing the closure of a few Giant stores in Singapore, whilst Malaysia retail growth is expected to be uninspiring in the 2H18F,” says See.
As at 11.03am, shares in SSG and DFI are trading at $1.04 and US$9.01, respectively.