Sheng Siong Group Q226 briefing: Higher margins and a healthy store pipeline

Research evidence excerpt

Sheng Siong Group Q226 briefing: Higher margins and a healthy store pipeline

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consumers preferring nearby supermarkets for regular purchases. While some price-

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sensitive customers may shop more frequently in Johor, management noted that savings 12/28E 0.11 0.11 4 0.12

are concentrated in locally-produced Malaysian products (e.g., eggs 20-30% cheaper),

whereas imported products are often close to price parity. As such, the RTS may Bernice Chew

encourage more frequent bulk shopping trips but would not materially changing weekly Analyst

grocery shopping patterns. Management has no plans to enter Johor and remains bernice.chew@ubs.com

+65-6495 3507

focused on growing its Singapore presence.

Permada Darmono

Foodpanda partnership yielding encouraging initial results Analyst

permada.darmono@ubs.com

Management described the Foodpanda partnership as encouraging, with promotions +65-6495 3137

generating strong consumer response and providing access to a large delivery network

without having to build its own rider fleet. More broadly, management believes online

grocery demand is strong but profitability remains challenging across the industry.

Management sees two online customer segments emerging: quick-commerce shoppers

seeking small, immediate purchases and traditional e-commerce customers placing

larger orders with longer delivery lead times. Store-based fulfilment is better suited for

the former, while automated fulfilment centres are more efficient for the latter. The new

Sungei Kadut distribution centre is being designed to support both fulfilment models

through a common automation backbone, which should improve picking efficiency and

support future online growth.

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