The Straits Times Index (SGX: ^STI) delivered a blockbuster performance last year with a total return of 23.5%, one of its best performances in a decade.

The bellwether blue-chip index also outperformed regional peers and was one of the best-performing indices in Southeast Asia.

However, not all stocks enjoyed the same bullish run as the Straits Times Index.

Sheng Siong (SGX: OV8) saw its share price rise by only 6.5% in the past year.

Investors may be wondering what’s next for the supermarket operator.

Let’s delve deeper to see what we can expect from Sheng Siong in the coming months.

A commendable set of earnings

For the record, Sheng Siong delivered a commendable set of earnings for the first nine months of 2024 (9M 2024).

Revenue rose 4% year on year to S$1.1 billion while gross profit improved by 6% year on year to S$328.8 million.

Gross margin continued its climb, going from 29.9% in 9M 2023 to 30.5% in 9M 2024.

Net profit increased by 8.7% year on year to S$109.1 million.

The retailer reported diluted earnings per share (EPS) of S$0.073 for 9M 2024.

In addition, Sheng Siong also generated a healthy positive free cash flow of S$141.3 million, up nearly 13% year on year.

What’s impressive is that the supermarket operator has seen its gross margin rise without a pause, going from 27.4% in 2020 to 30% in 2023.

For the third quarter of 2024 (3Q 2024), gross margin hit a high of 31.3%.

Bidding and winning

These financial numbers are supported by the opening of new stores over the years.

Since 2020, the retailer has opened a total of six stores, going from 63 stores in 2020 to 69 by the end of 2023.

2024 was a bumper year for the group as HDB released 17 shops for tender, of which Sheng Siong was awarded four.

Another four are awaiting tender results and could factor into Sheng Siong’s new store count for 2025.

As of 29 October last year, a total of five stores were opened, including one at Block 512 Bishan Street 13.

Sheng Siong also acquired Jelita Property Pte Ltd and has opened a new store in Toa Payoh before the end of 2024, making it a grand total of six stores opened in 2024.

This number of new stores is double of what management has aimed to do, which is to open at least three new stores per year.

New stores drive revenue growth 

Investors should note that new store openings help to drive the bulk of Sheng Siong’s revenue growth.

9M 2024 saw a 4% year-on-year increase in revenue, of which 2.1% was contributed by new stores with 1.8% attributable to higher comparable store sales.

If we drill down to just 3Q 2024, revenue increased by 5% year on year of which new stores contributed 3.2%.

Hence, new stores were responsible for more than half of the revenue growth number for both periods.

This simple fact illustrates the importance of new store openings in driving both revenue and profit growth for the retailer.

A promising HDB supply pipeline

Armed with these statistics on store openings and the drivers of revenue growth, investors next question would naturally be – what’s the outlook for new store openings in 2025 and beyond?

There’s good news on this front, too.

HDB will supply around 19,600 built-to-order flats across three sales exercises this year.

If you include the Sale of Balance Flats, this number rises to more than 25,000 to be launched in 2025 alone.

From 2025 to 2027, more than 50,000 HDB units will be launched, which implies that another 25,000 units will be slated for launch in both 2026 and 2027.

These numbers bode well for Sheng Siong as it increases the number of shop spaces available for bidding, thus increasing the chances that the retailer can snag more sites for new stores.

Get Smart: Good times ahead

The outlook is bright for Sheng Siong as it reports strong financial numbers and opened the most number of stores in a year since 2020.

With new stores being a key driver of revenue growth, the group looks poised to report higher top line numbers in 2025.

The continued rise in gross margins is another strength as it will trickle down to net profit.

HDB has ramped up its supply of flats for 2025 through 2027 and Sheng Siong should have many opportunities to bid for suitable shop spaces.

There could be good times ahead for the retailer as it continues to increase its store count and broaden its range of house branded merchandise.

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