Sheng Siong (SGX: OV8) kept its foot on the accelerator in the first half of 2026 (1H 2026).
The supermarket operator grew operating profit by 15.7% year on year and lifted its interim dividend by 17.2% to S$0.0375 per share.
Now the grocer has a far bigger project in motion: a S$520 million distribution centre at Sungei Kadut.
Where is Sheng Siong’s growth coming from?
New stores supplied most of it.
Sheng Siong opened 12 stores in 2025 and four more this year.
Together, these 16 stores contributed 9.7 percentage points to revenue growth in 1H 2026.
Comparable same stores added another 3.3 points.
On the flip side, the Elias Mall store closure took off 0.7 points, and China took off 0.4 points.
As a whole, Sheng Siong’s retail area in Singapore expanded 9.5% year on year to 772,630 square feet.
Gross margin moved up too.
It reached 31.8%, a full percentage point above the 30.8% of a year ago and ahead of 2025’s record 31.3%.
How many more stores are on the way?
Sheng Siong has slated three new stores in Hougang, Rivervale and Woodlands for 3Q 2026.
It also has one HDB tender pending and expects two more within 12 months.
Thomson Imperial Court closes in November 2026.
The store at 19 Serangoon North Avenue 5 may follow by year-end if JTC declines renewal.
For context, management guided for three to five new stores a year at its recent AGM.
By our count, Sheng Siong is on track to add five to six net new stores by the end of 2026.
That puts the grocer ahead of its own guidance.
What will the Sungei Kadut centre do for Sheng Siong?
Sheng Siong will build the distribution centre progressively between 2026 and 2030.
Once complete, the facility will have capacity to serve at least 120 supermarkets.
It’s a significant undertaking.
What price will Sheng Siong pay, and can it afford it?
The bill comes to S$520 million.
There is a wrinkle in the story.
For 1H 2026, free cash flow (FCF) fell 41.1% year on year to S$46.4 million.
At face value, that looks alarming.
But it may not be.
Cash generated from operations before working capital movements rose 14.4% to S$132 million, faster than profit growth.
The entire shortfall sits in a S$68.7 million reduction in trade and other payables.
Sheng Siong paid out accrued bonuses and settled vendor balances earlier.
Companies count bonuses as an expense when employees earn them, but the cash leaves later.
For context, Sheng Siong generated S$216 million in FCF in 2025.
If it can match or increase this figure, then the extra cash will come in handy.
And let’s not forget that the supermarket operator holds over S$402 million in cash on its balance sheet.
Management also confirmed at its AGM that it is considering debt financing.
In other words, there are a few options on the table for Sheng Siong to finance the Sungei Kadut distribution centre.
What could slow Sheng Siong down?
The Johor Bahru–Singapore RTS Link starts operating in January 2027.
A recent study estimated that the net spending outflow could equal roughly 0.4% of Singapore’s total retail and food-and-beverage sales in 2025.
Groceries made up the largest share.
Management argues that perishability and travel time keep everyday grocery shopping local.
It remains to be seen what the impact will be.
Get Smart: Track the stores, not the warehouse
The Sungei Kadut centre will take until 2030 to complete.
You do not need to wait that long to judge the plan.
Count net new stores each half-year against management’s guidance of three to five a year.
From 1Q 2027, check comparable same-store sales for the RTS Link’s impact.
Watch full-year FCF too.
Every six months, ask one question.
Is Sheng Siong opening stores fast enough to grow into the capacity it is paying for?
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Disclosure: Chin Hui Leong owns shares of Sheng Siong.
