Sheng Siong shares fall after Maybank downgrades rating, cuts price target

Share Performance and Downgrade

Singapore's Sheng Siong Group experienced a share price decline on Monday, 12 October 2026, following a downgrade from Maybank. The supermarket chain's shares fell as much as 3 per cent in early trading, eventually closing 2.1 per cent lower at S$2.86.

This movement came after Maybank adjusted its rating for Sheng Siong from "buy" to "hold" last Friday, concurrently reducing its target price from S$3.22 to S$3.12. Maybank cited valuation concerns, noting the company's current forward price-to-earnings (P/E) ratio of 28.4 times positions it among the region's most expensive food retailers.

Maybank's Revised Outlook

Maybank's analysis also included a downward revision of Sheng Siong's operational forecasts. The financial institution now anticipates four new Sheng Siong stores in 2028, a reduction from its earlier projection of five. Furthermore, Maybank lowered its net profit after tax (NPAT) estimates for the financial years 2026 through 2028 by 1 to 3 per cent.

Despite Sheng Siong's projected 8 per cent compound annual growth rate (CAGR) in NPAT until 2028 and a 2.5 per cent dividend yield, Maybank analyst Hussaini Saifee indicated a preference for Food Empire within the consumer sector, highlighting its 31 per cent NPAT CAGR and more moderate valuations.

Shifting Market Dynamics

The revised outlook stems from an assessment that previous market advantages for Sheng Siong are diminishing. Maybank noted a decrease in the impact of factors like robust consumption, market share gains, and government vouchers specifically aimed at supermarkets.

The firm pointed to a shift towards broader financial assistance, such as unrestricted Goods and Services Tax (GST) Vouchers and direct cash payments. Additionally, the early release of S$500 Community Development Council (CDC) Vouchers in June 2026, originally slated for January 2027, boosted demand in FY2026 but created a higher comparative base for FY2027.

Increasing Competition and Future Headwinds

Sheng Siong also faces heightened competition and evolving market conditions. Maybank observed that the benefit from closures of Giant and Cold Storage outlets has largely concluded, with only one store closing between the two competitors.

Macrovalue, the new owner of Cold Storage and Giant since 2025, has resumed expansion with its "On The Go" convenience stores, planning a rollout to 58 Esso petrol stations across Singapore by the end of 2026, targeting over 100 outlets eventually.

While these convenience formats do not directly compete with Sheng Siong's larger stores, they will add pressure on "top-up" grocery purchases.

Upcoming cross-border shopping via the Johor Bahru–Singapore Rapid Transit System (RTS) and the expansion of online grocery services could further affect Sheng Siong, especially given that 27.5 per cent of its stores are within 15 kilometres of the RTS station. Investors should monitor these competitive shifts and consumer spending patterns as the market normalises.