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latest new from Sheng Siong analysis the upcoming earning

Sheng Siong Group (SGX:OV8) recently announced its Q1 FY2025 results on April 29, 2025. Here's a breakdown of the latest news and an analysis of what to expect for their upcoming earnings.

Latest News and Q1 FY2025 Performance Highlights:

Strong Q1 FY2025 Results: Sheng Siong reported a 7.1% year-on-year (yoy) increase in revenue to S$403.0 million and a 6.1% yoy increase in net profit to S$38.5 million for the first quarter ended March 31, 2025. This performance exceeded analyst expectations.

Key Growth Drivers:

New Store Openings: A significant portion of the revenue growth (6.3% of the 7.1% increase) was driven by contributions from eight new store openings in 1Q FY2025 and FY2024. Sheng Siong has an aggressive expansion strategy, targeting up to 10 new store openings in FY2025. They have already secured six additional retail locations, with two launched in 1Q25, and are awaiting results for four more HDB tenders.

Festive Sales: Higher festive sales during Hari Raya in March also contributed to the revenue increase.

Improved Sales Mix and Gross Margin: Gross profit increased by 10.2% yoy to S$122.0 million, with the gross profit margin improving by 0.9 percentage points yoy to 30.3%. This was attributed to enhancements in their sales mix, which helped offset rising operating costs.

Higher Other Income: Other income rose by 18.1% yoy, driven by increased rental income from expanded leased space and government grants like the Progressive Wage Credit Scheme (PWCS).

Operational Efficiency Focus: Sheng Siong is actively refining its sales mix, diversifying its supplier base for supply chain resilience, and investing in automation and AI technology to improve operational efficiency and mitigate rising labor costs.

China Operations: Their six stores in China contributed 2.8% of the company's revenue in 1Q 2025, though this segment was loss-making in 1Q25.

Share Price Performance: Sheng Siong's share price recently hit an all-time high, up over 13% year-to-date as of mid-May 2025, reflecting investor confidence in its expansion strategy and consistent performance.

Dividends: The company maintains a consistent dividend payout, having declared a total of S$0.064 per share in dividends for FY2024, a slight increase from FY2023.

Upcoming Earnings Analysis (Q2 FY2025):

Sheng Siong is scheduled to report its Q2 FY2025 earnings around July 24, 2025.

Factors to Consider for Q2 FY2025 Earnings:

Continued Store Expansion: The ongoing aggressive store expansion strategy will likely be the primary driver of revenue growth. With more new stores confirmed to open by 3Q 2025, these will start contributing to the top line.

Impact of New Store Overheads: While new stores drive revenue, they also entail upfront staffing and rental expenses, which could exert some pressure on short-term profitability in FY2025. Analysts have noted that operating profit margins might see some pressure due to these initial overheads.

Government Support Measures: The Singapore government's continued rollout of support measures, such as CDC vouchers and SG60 vouchers, is expected to continue benefiting Sheng Siong as a key beneficiary. These vouchers encourage grocery spending at supermarkets.

Operating Costs and Inflation: The general inflationary environment and rising operating costs, particularly labor costs, remain a challenge. However, Sheng Siong's focus on enhancing its sales mix and investing in operational efficiency (automation, AI) aims to mitigate these pressures and maintain healthy gross margins.

Consumer Spending Patterns: With growing uncertainty around prices and income stability, consumers are likely to continue preferring value-driven supermarkets like Sheng Siong and focusing on essential items. This trend should continue to support Sheng Siong's sales.

Supply Chain Management: Geopolitical tensions and global trade disruptions could impact supply chain stability and freight costs. Sheng Siong's efforts to diversify its supplier base will be crucial in managing these risks.

Comparable Same-Store Sales: While new stores are the main growth driver, the performance of existing stores (comparable same-store sales) will also be a key metric to watch. In Q1 FY2025, comparable same-store sales grew modestly at 0.1% yoy.

Analyst Sentiment:

Analyst sentiment generally remains positive, with many maintaining "Buy" or "Add" ratings. DBS Group Research recently raised its target price for Sheng Siong, citing steady earnings growth and margin superiority. The consensus view is that Sheng Siong is well-positioned for continued growth, primarily driven by its robust store expansion plans.

In summary, for the upcoming Q2 FY2025 earnings, expect continued revenue growth driven by new store openings. While profitability might face some short-term pressure from initial store overheads, Sheng Siong's operational efficiency initiatives, diversified supply chain, and the tailwind from government support measures are expected to support its overall performance. Investors will be keen to see how the new stores contribute to revenue and how effectively the company manages its operating costs in the current economic climate.

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Sheng Siong Navigates Growth and Inflation: A Look Ahead at Q2 FY2025 Earnings

SINGAPORE – June 16, 2025 – Singaporean supermarket giant Sheng Siong Group (SGX:OV8) is poised for continued scrutiny as it prepares to release its Q2 FY2025 earnings, expected around July 24, 2025. Fresh off a strong Q1 FY2025 performance, the retailer is in a crucial phase of expansion, balancing aggressive store openings with rising operational costs and a cautious economic outlook.

Sheng Siong's Q1 FY2025 results, announced on April 29, 2025, painted a positive picture, with revenue surging 7.1% year-on-year (yoy) to S$403.0 million and net profit climbing 6.1% yoy to S$38.5 million. This robust performance largely exceeded analyst expectations, driven primarily by contributions from eight new store openings since FY2024 and heightened festive sales during Hari Raya in March. The company also demonstrated an impressive ability to improve its gross profit margin by 0.9 percentage points to 30.3%, a testament to its refined sales mix and proactive cost management strategies.

However, as Sheng Siong looks towards its Q2 FY2025 report, investors will be closely watching several key factors that could influence its financial trajectory:

The Expansion Imperative: Sheng Siong has made its intentions clear: aggressive expansion is a cornerstone of its growth strategy. The company aims for up to 10 new store openings in FY2025, its highest target since 2018. Having already opened two new stores in Q1 and secured six additional retail locations slated for opening by Q3 FY2025, the supermarket chain is rapidly extending its footprint across Singapore. While these new stores are undoubtedly catalysts for top-line revenue growth, they also come with inherent costs. Analysts caution that initial overheads for staffing, rentals, and pre-operating expenses at these new outlets could exert some short-term pressure on profit margins in FY2025.

Navigating the Cost Landscape: The current inflationary environment in Singapore and globally continues to pose a challenge for retailers. Rising labor costs, in particular, remain a significant concern for Sheng Siong, as evidenced by increased staff costs contributing to higher administrative and selling expenses in Q1. The company's ongoing investments in automation and AI technology, coupled with its focus on diversifying its supplier base, are strategic moves designed to enhance operational efficiency and mitigate these cost pressures. The success of these initiatives will be critical in maintaining Sheng Siong's industry-leading margins.

Government Support and Consumer Behavior: The Singapore government's continued rollout of support measures, such as CDC vouchers and upcoming SG60 vouchers, is expected to remain a tailwind for Sheng Siong. As a major grocery retailer, the company is a direct beneficiary of these initiatives, which encourage consumer spending on essentials. Furthermore, in an environment of economic caution, consumers are increasingly likely to gravitate towards value-driven supermarkets, a trend that plays directly into Sheng Siong's established brand and focus on affordable, quality goods.

The China Question: Sheng Siong's six stores in China contributed a modest 2.8% to its Q1 FY2025 revenue, but this segment was loss-making during the period. The performance and outlook for its China operations will be a point of interest, especially as the company balances its domestic expansion with its international ventures.

Analyst sentiment remains largely positive, with many firms reiterating "Buy" or "Add" ratings. The general consensus points to Sheng Siong's resilient business model and its strong domestic market position as key strengths. While short-term profitability may see some transient pressure due to the accelerated store rollouts, the long-term outlook appears robust, underpinned by expanding network effects and disciplined operational management.

As the Q2 FY2025 earnings announcement approaches, investors will be looking for clear indications of how effectively Sheng Siong is managing its rapid expansion, its ability to maintain its gross profit margins amidst rising costs, and the continued impact of government support measures on consumer spending. Sheng Siong's journey showcases a dynamic retailer committed to growth, strategically adapting to market conditions while retaining its core value proposition. Do your own due diligence check before invest. @TigerClub @MillionaireTiger @TigerStars @TigerEvents @Tiger_SG