Should Sheng Siong fear Lum Chang's acquisition of The Verge?

Its lease is set to expire by March 2017.

Lum Chang Holdings' planned acquisition of The Verge commercial site might be bad news for Sheng Siong Group as its branch in the mall is feared to close.

It was recently reported that a joint venture between Lum Chang Holdings and a fund of LaSalle Investment Management Asia had signed an agreement to buy The Verge.

According to OCBC Investment Research, Sheng Shiong has stores in The Verge which has a lease slated to expire by March 2017.

"With this looming, we keep in mind that this store’s same store sales growth has been relatively weak in the past few years mainly due to the construction works in the vicinity," the report stated.

However, while the closure of the store is likely to happen because of the acquisition, the report underscored that revenue contribution from the outlet has not made any serious impact.

"We believe that revenue contribution has not been significant, but opt to wait for
further clarity on this development before adjusting our estimates," OCBC said.