The Straits Times Index (SGX: ^STI) achieved new records last month as the index broke past both the 4,000 level and the 4,200 mark.
But it’s not just the bellwether blue-chip index that is doing well.
Sheng Siong (SGX: OV8) did even better as its share price surged 28.9% year-to-date, allowing the retailer to attain a new all-time high of S$2.23.
However, the group’s share price has since declined to S$2.10 because of profit-taking.
Can investors expect the supermarket operator to continue doing well? Will its share price go on to break new records?
A solid set of results
Sheng Siong reported a solid set of financial results for the first half of 2025 (1H 2025).
Revenue rose 7.1% year on year to S$764.7 million.
Operating profit increased by 4.7% year on year to S$84.8 million as selling and distribution expenses jumped nearly 14% year on year.
The retailer’s net profit stood at S$72.3 million, up 3.5% year on year.
The group continued to maintain a rock-solid balance sheet flush with cash of S$367.2 million and zero debt.
The supermarket operator churned out a positive free cash flow of S$78.9 million for 1H 2025, 9% lower than the previous year’s S$86.7 million.
An interim dividend of S$0.032 was declared, unchanged from a year ago.
Investors are probably cheering Sheng Siong’s latest financial results as the group continued to post year-on-year increases in its top and bottom lines.
Gross margin continues its climb
Another noteworthy trend is that of Sheng Siong’s gross margin.
Since 2021, the group has continued to report increasing gross margins as it optimises its supply chain and relies on a greater proportion of house-brand products within its sales mix.
Sheng Siong’s gross margin started off at 28.7% back in 2021 and rose to 29.4% in 2022, and then to 30% by 2023.
Last year, Sheng Siong’s gross margin improved further to 30.5%, continuing this trend of increasing gross margin.
1H 2025 saw continued improvement, with gross margin hitting a high of 30.8%, above the previous year’s 30.1%.
Net margin, however, was more volatile.
2022 saw Sheng Siong attain a net margin of 10% but this margin has trended down subsequently as higher costs due to inflation started to bite.
For 1H 2025, the retailer achieved a respectable net margin of 9.5%.
Aggressive store expansion for 2025
Underpinning Sheng Siong’s top and bottom-line growth is its store expansion over the years.
10 years ago, Sheng Siong had just 39 stores in Singapore, but this number has more than doubled to 82 by the end of July 2025.
The supermarket operator has opened at least one new store per year, even through the recent COVID-19 pandemic.
Store count stood at 75 at the end of last year, and 1H 2025 saw the opening of five new stores, taking the total to 80 by the end of 1H 2025.
Two more stores opened in July 2025, and an eighth store is slated to open by the end of the third quarter of this year (3Q 2025).
The group intends to open at least three new stores per year, but it looks like 2025 is turning out to be more aggressive than most years, as the retailer is slated to open eight new stores.
This is the largest number of stores that Sheng Siong has opened since 2018, when 10 new stores were set up across the island.
Management shared that three more HDB tenders are awaiting results, which means that the group could open even more stores before the year ends.
Moreover, three more HDB tenders are expected to be released by 1H 2026, giving Sheng Siong ample opportunity to extend its Singapore presence.
Tailwinds for the business
Apart from new store openings, management also identified several tailwinds that could support further business growth.
Macroeconomic uncertainties relating to Trump’s widespread tariffs will weigh on consumer sentiment, pushing customers to choose more budget-friendly options by purchasing house-brand products.
Sheng Siong will prioritise its sales mix and continue to improve efficiency and productivity with technological enhancements.
Management did warn, however, that stiff competition along with higher input costs may continue to put pressure on net margins.
Get Smart: On track for further growth
Sheng Siong has an effective long-term strategy of expanding its presence into new areas of Singapore.
With the government opening up new areas to build HDB estates amid an influx of new HDB flats, the group should identify more opportunities to tender for new stores.
The retailer is also entering malls for the first time, and has opened a new outlet in Kinex Mall with another slated to open in The Cathay.
Investors should gear up for more growth from the group as it continues to improve its gross margin and open new stores in the years to come.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
