Supermarket bidding war on the cards

Will Sheng Siong be able to snap up a new outlet?

In the next 6 months, there will be a total of seven new supermarket commercial units available for tender, of which UOBKayHian expects Sheng Siong Group (SSG) to tender for a majority of the units available.

NTUC Fairprice, Giant and other smaller supermarket players are also expected to put in bids for the limited units available. But, given the management's prudence when it comes to expanding, the research house expects SSG to only put in competitive bids which they are confident of profitability. This, it said, might result in them securing little to no new outlets if a bidding war happens.

"In the case that attractive new retail space goes up for sale, we expect SSG to utilise their clean balance sheet to purchase these units which may require borrowings as capex has been very heavy this year due to the purchase of the Bedok store, progress payments for the purchase of retail space at Yishun and the upgrading of warehouse facilities," it said.