It can even be a growth catalyst, analysts say.
The current economic downturn in Singapore has left locals with tighter pockets, and it’s usually bad news for retail firms such as Sheng Siong.
However, analysts from RHB Research say the defensive nature of Sheng Siong’s sales are likely to hold up quite well this year against a backdrop of weak spending in Singapore.
“This environment may provide the catalyst for its next leg of growth as the firm is well placed to secure favourable long-term rental locations/ rates,” RHB Research said.
Meanwhile, RHB Research said profit growth is also expect to come from further margins expansion in 2016.
“We expect demand conditions to remain tepid in 2016, lending to weak same-store sales growth (SSSG). However, Sheng Siong’s profitability is likely to be driven by further improvements in operating margins,” RHB Research.
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