Sheng Siong

Sheng Siong: CS has unrated report. House We met with Sheng Siong's management who provided an operational and strategic update on the company. The Group believes its focus on heartland areas and a superior wet groceries is a strategic advantage. To increase margins, the group intends to focus on increasing contribution of high margin wet groceries (30% of sales) and inhouse brands (5% of revenues). While the company noted that the Singapore retail business has been free from any sustained price wars, it believes that the key risks to its growth and margins are from any change in demographic trends, rental costs and the difficulty it sees in maintaining labour quality and costs. The group targets high single-digit revenue growth over the next two years. It highlighted that its three key medium-term growth drivers are; 1) Target expansion to 50 locations to increase penetration in the next 2-3 years, 2) Build a superior e-commerce platform as a key differentiator and 3) Expand into Malaysia.