“We believe the worst is over for Singapore F&B Foodservice barring an unforeseen return to Phase 1 of the Circuit Breaker. With the gradual opening of the economy, we see F&B Foodservice improving as more activities resume,” says lead DBS Group Research analyst Alfie Yeo in an Oct 23 report.
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The analyst seems positive on the Singapore consumer downstream industry as the gradual road to normalisation of supermarket and F&B Foodservice spending in Singapore is on the horizon.
Yeo is upbeat on the gradual recovery of the consumer sector. Following the worst months for Singapore retail sales in April and May in Phase 1, relaxation of the Circuit Breaker in early June has seen a gradual improvement in F&B foodservice spending in Singapore, short of tourists portion of F&B spend.
Singapore retail sales is in a transition mode, with supermarket sales normalising and F&B foodservice gradually improving as more of the workforce returns to work and other aspects of life including dining out and other recreational and leisure activities resume.
With Phase 3 taking effect in a matter of time, Yeo’s top “buy” picks lean towards mid-to low-end F&B players while avoiding players with high tourist exposure, such as Jumbo. His “buy” picks include food court operator Koufu, and supermarket operators Sheng Siong and Dairy Farm, with target price of 77 cents, $1.91 and $4.44, respectively.
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“We believe Singapore is likely to move into Phase 3 soon if the Covid-19 situation continues to remain stable with low rates of local transmissions. This should lead to further easing of safe distancing measures, while longer operating hours and less restrictive dine-in limits will help to drive the F&B foodservice segment,” says Yeo.
Singapore is now just waiting for announcement of Phase 3 of reopening of the economy, as Covid-19 community cases have been consistently none for several consecutive days.
But as health minister Gan Kim Yong puts it, Singapore is “not out of the woods yet”. Hence, the pace towards normalisation is not expected to be aggressive, as a viable vaccine has yet to be commercialised, and mass travel tourists have yet to return to our shores.
