Analysts cut Sheng Siong target price as rising costs cloud earnings outlook
These revisions come as the company’s shares continue to fall, down as much as 9.4% on Monday
Analysts have reduced their target prices for Sheng Siong, a supermarket operator, as rising costs and slowing sales growth cast doubt on the company's earnings outlook. DBS lowered its target price to S$2.70 from S$3, while RHB reduced its target to S$3.20 from S$3.59, and CGS International cut its target to S$3.10 from S$3.60.
Despite these reductions, all three brokers maintained their "buy" ratings. Sheng Siong's shares dropped 4.6% on Friday and another 9.4% to S$2.42 on Monday, marking a 13.5% decline over two trading sessions. The company reported a 1.9% year-on-year increase in net profit for Q3, but revenue growth slowed to 6.2%. Higher staff costs, depreciation, and other operating expenses offset the growth in gross profit.
DBS expects Sheng Siong's earnings growth to decelerate to around 4% in the fourth quarter due to the tapering of Community Development Council vouchers and persisting higher operating costs. Analysts also cited rising electricity costs as a significant risk for FY2027, as Sheng Siong has yet to renew its utilities contract. While RHB and CGSI remain optimistic about Sheng Siong's store expansion prospects and defensive business model, they anticipate that higher operating expenses could pressure earnings in the short term.
Written by urgent.news from The Business Times - Companies & Markets's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
