Sheng Siong pressured to open Tampines Central store by Chinese New Year

As its newest stores are reaching normalised growth.

Sheng Siong has reached a total number of 34 stores in Singapore, with its new 4.0k store in the Penjuru area that is targeted at residing foreign workers.

According to a report by OCBC Investment Research, SSG also met with a delay in relation to its acquisition of Block 506 Tampines Central 1 due to regulatory approvals, but it will likely follow through.

OCBC adds that some upside could be seen if management is successful in its push to open this new store (~9.8k sq ft) before the next Chinese New Year to reap the benefits of higher sales during the festive season. The remaining ~26.2k sq ft of retail space suggests any eventual expansion would translate to higher revenue contribution from the Tampines store.

Here’s more from OCBC:

We would like to highlight that the eight new stores added in 2012 could be reaching normalised growth rates. Looking ahead, in view of the expected closure for its ~42k sq ft Woodlands store in 2017, we note the importance of store expansion in the next two years for SSG.

The ~19k sq ft Yishun J9 store slated to open in 2017 would partially offset the loss in resulting revenue contribution but clearly effects would be marginal as a new store needs time to achieve optimum contribution level. While holding a significant cash balance, SSG has to show that they are readily capturing opportunities to ensure its business continue to achieve growth in the coming years.