Sheng Siong opened four new stores in Q1

It has even more potential to open stores as 10 supermarket sites are available this year, an analyst said.

Sheng Siong opened four new outlets in the first quarter, and two more are set to begin operating this quarter, RHB Research reported.

RHB analyst Juliana Cai noted that there are 10 more supermarket sites available for tender from now till the end of the year. "As such, we believe it has strong potential to open even more stores and deliver even better results over the next three quarters," she added.

With that, Cai thinks Sheng Siong is a clear beneficiary of the recovering consumer sentiment in Singapore. "In addition, with the expansion of its Tampines outlet and renovation of the Loyang outlet in 2017, we believe Sheng Siong may continue to be strong this year," she said.

Singapore Business Review also previously reported that Sheng Siong would expand its warehouse by 20%, instead of 10%. "Sheng Siong is also making efforts to increase the level of automation in the new extension," Cai added. "We note that it aims to complete the extension before the Lunar New Year sale in FY2019, which would allow it to handle more bulk amounts."

The additional capacity would also enable the group to handle a higher store count, do more direct-sourcing, and get more suppliers’ rebates as a result, the analyst said.