Sheng Siong shares slide 4.2% after OCBC ratings downgrade
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Sheng Siong saw its shares slide after the OCBC downgrade.
ST PHOTO: JASON QUAH
SINGAPORE - Shares of supermarket chain Sheng Siong slid 4.2 per cent on Feb 11 after OCBC released a report this week giving it a ratings downgrade.
The stock was trading at $2.74 around noon, down 11 cents from its opening price of $2.85. It ended the day at $2.73, down 4.2 per cent.
OCBC’s report out on Feb 9 downgraded its call on Sheng Siong to “hold”.
OCBC equity research analyst Chu Peng said the group ended 2025 strongly, with its share price rising some 60 per cent.
This means that Sheng Siong significantly outperformed the Straits Times Index, which saw gains of 23 per cent.
She said: “The stock was among the top performers within the Singapore consumer companies under our coverage.
“We attribute Sheng Siong’s outperformance to a combination of strong earnings visibility, its defensive nature, market share gains from store expansion, and support from CDC cash handouts and Equity Market Development Programme (EQDP) flows.”
The EQDP is meant to allocate $5 billion to fund managers to boost liquidity in the Singapore market. Of this, $3.95 billion has been allocated to nine asset managers.
While these drivers for Sheng Siong’s strong performance in 2025 should continue into 2026, Ms Chu noted that the group’s valuations look demanding.
She said Sheng Siong’s defensive strength remains intact, but its valuations appear stretched after the strong price rally.
She noted that the stock is currently trading at a 12-month forward price-to-earnings ratio of 24.8 times, referring to the company’s share price relative to its earnings per share.
This ratio is above its historical average of 19.6 times.
Still, Sheng Siong remains a defensive play for investors amid rising inflation and slower economic growth.
“Demand for groceries could be supported by a shift in consumption patterns towards a focus on value-for-money options due to inflationary pressures and a higher cost of living,” Ms Chu said.
“Moreover, grocery sales could be supported by Singapore Budget 2025’s announcement on inflation offset measures such as CDC vouchers.”
She noted that demand for essential goods has remained largely stable, with retail sales rising 2.7 per cent in December.
Supermarket and hypermarket sales increased 4 per cent year on year, indicating steady underlying demand for essential goods amid softer discretionary spending, Ms Chu said.
She added that she has raised her fair value estimate for Sheng Siong from $2.77 to $2.89 on a lower cost of equity assumption, pending further insights from the group’s 2025 results which are due on March 2.
