SINGAPORE - Supermarket operator Sheng Siong is aiming to open three to five stores annually in the next three to five years, the company said in a bourse filing on Wednesday (April 20).
Sheng Siong currently has 65 outlets in Singapore.
Responding to questions from its shareholders ahead of the company's annual general meeting on April 26, Sheng Siong said it will continue to look out for retail spaces in new and existing public housing estates, particularly in areas where they do not have a presence.
The company said the supply of new Housing Board shops has been affected in the last two years but is expected to improve gradually.
In 2021, Sheng Siong succeeded in securing the leases of three new stores.
New stores have boosted the company's earnings. Sheng Siong in February said that its revenue for the second half of 2021 rose 6.4 per cent to $688.1 million due to the opening of three new outlets in Singapore in the second half of 2020.
Sheng Siong also plans to expand its footprint in Kunming, China, where it currently has four stores.
"Our business there has continued to be profitable... we will continue to work on nurturing the growth of our supermarket operations, and aim to open more stores in Kunming," said the company in its filing.
The Shanghai lockdown has had no impact on its business unit in China at the moment, said the supermarket operator.
However, the risks of supply chain disruptions resulting from the Covid-19 pandemic, climate and geopolitical events could result in higher input costs, it said.
"At Sheng Siong, we will strengthen our efforts in diversifying our sources of supply, and work closely with our suppliers to minimise these disruptions," it added.
With the subsiding of the domestic Covid-19 situation, together with the further easing of restrictions, Sheng Siong said it expects the elevated demand to taper down as consumers increase their spending on other social activities or international travel.
It also said competition remains keen from other supermarket operators and online marketplaces.
"We will also continue to build on our e-commerce capability to extend our reach to customers in areas where we do not have physical presence," said the company.
But while it saw an increase in demand for its e-commerce delivery service, Sheng Siong said the majority of its customers continue to prefer to make purchases from physical supermarkets, especially for fresh produce.
The company also said it has no plans to pay higher dividends to shareholders. Since financial year 2017, Sheng Siong has distributed about 70 per cent of its net profit after tax as dividends.
"We will continue with the practice unless there is a need for cash for operational reasons or major capital expenditures. The board also felt that we should (have) a 'war chest' ready on hand and preferred to conserve cash rather than gear up when the need arises," it said in the filing.