Supermarket chain operator Sheng Siong Group, a regular winner at the Billion Dollar Club, is back yet again. This year, Sheng Siong is named winner in the weighted ROE category. It has been named overall sector winner as well.
With around 60 outlets, Sheng Siong is one of the largest supermarket chains in Singapore. Instead of taking up anchor tenant positions in fancy malls, Sheng Siong prefers to be deep in the heartlands instead.
It carries a wide range of items ranging from live, fresh and chilled produce, such as seafood, meat and vegetables, in addition to processed, packaged and preserved food products as well as general merchandise such as toiletries and other household essentials.
In FY2020 ended last December, the company benefited from a surge in demand. Large swathes of the populace thronged supermarkets like Sheng Siong to stock up on food and household items just when the pandemic started, over supply disruption concerns.
For the three financial years where the winners of this year’s awards were taken into consideration, Sheng Siong’s weighted return on equity was 32.8 times.
See also: Analysts mixed on Sheng Siong as its hey days are likely over
In its most recent 1HFY2021 earnings commentary on July 29, the company says that with the gradual easing of Covid-19 restrictions and increased vaccination, demand will likely “taper down” in the current 2HFY2021.
The company also notes that because of the pandemic, the government has tightened the number of new shops for use as supermarkets. So far this year, just two tenders have been put out and the outcome will be announced later. This means is that Sheng Siong might not be able to grow as quickly as it wants, particularly in estates where the group has no presence. Sheng Siong also warns that competition from bricks-and-mortar and online supermarkets is expected to remain keen.
Japfa, which describes itself as a leading vertically integrated agri-food company, is the other key winner of this industry sector. For the three years leading to FY2020 ended last December, Japfa grew its earnings at a compounded annual growth rate of 524.6%, which made it the winner in the earnings growth category.
In the three years under consideration, Japfa’s share price grew at a compounded annual growth rate of 26.9%, making it the company that generated the best returns to shareholders, as well.
The company was listed in 2014 but can trace its roots to 1971. From rearing chickens in Indonesia in the early years, Japfa has expanded into the business of producing other proteins such as beef, pork and milk. It is active in China, India, Myanmar and Vietnam.
In its 1HFY2021 earnings commentary on July 29, Japfa notes: “Against this backdrop, the group is confident that its core competencies in large-scale farming and food production as well as its strategy of diversification across multiple proteins and geographies, together with its track record in replicating its industrialised and scalable business across the region, will continue to sustain its growth in the medium to long-term,” it says.
Photo: The Edge Singapore/ Albert Chua
