Sheng Siong posts 3Q21 net profit rose 8 percent on tighter Covid restrictions

Sheng Siong Supermarket in Singapore’s Little India area; taken October 2018.Sheng Siong Supermarket in Singapore’s Little India area; taken October 2018.

Supermarket operator Sheng Siong Group reported Thursday its third quarter net profit rose 8.3 percent on-year to S$34.4 million as tighter Covid-19 restrictions in Singapore boosted revenue. Singapore has imposed restrictions on dining-in at food and beverage outlets.

In addition, an improved sales mix of products with higher margins also provided a boost, Sheng Siong said.

Revenue for the July-to-September period rose 6.4 percent on-year to S$348.1 million, boosted by new stores and comparable same-store sales, the company said in a filing to SGX. Three stores were opened in the third quarter of 2020, which contributed to this year’s results, the filing said.

The gross profit margin for the quarter rose 2 percentage points on-year to 29.0 percent, while the net profit margin increased 0.2 percentage point to 9.9 percent, Sheng Siong said.

For the January-to-September period, Sheng Siong posted net profit fell 6.1 percent on-year to S$100.5 million, on revenue of S$1.03 billion, down 4.2 percent on-year.

Outlook

Sheng Siong said the Singapore government’s tighter Covid-related restrictions may boost demand on-year, but the government has said it is committed to transitioning to an endemic situation, which means that demand is likely to taper off.

The company also expressed concern that the foreign construction worker crunch has “greatly impacted” the supply of new HDB shops.

“However, the situation is expected to improve as the government has provided new measures to retain and hire work permit holders in the construction sector, and as border restrictions continue to relax. The group will continue to look for retail space in new and existing HDB Housing Estates, particularly in areas where we do not have a presence,” Sheng Siong said.

The company also noted competition in the supermarket industry would likely “remain keen,” and that supply-chain disruptions are a risk.