(Even) Sheng Siong targets Malaysia
Supermarket retailer Sheng Siong Group is in talks with a potential partner to help it expand into neighbouring Malaysia, its chief executive said.
Sheng Siong, which owns 25 stores in Singapore, aims to own at least 50 outlets in Malaysia over the longer term, to tap a fast-growing population and rising income that will boost demand for basic necessities like groceries.
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"Singapore and Malaysia's cultures are similar... Malaysia has a rising population, a lot of natural resources to boost its economy and thus grow consumer spending," Mr Lim Hock Chee, Sheng Siong's chief executive and co-founder, told Reuters.
Sheng Siong is planning to open its first Malaysian supermarket in Johor, and is in discussions to form a joint venture with a listed company in the country, he said.
It does not plan to compete in the hypermarket space, which is already crowded with larger rivals like Carrefour.
Shares of Sheng Siong have risen 19 per cent since it listed on Aug 17, outperforming the Straits Times Index's 5 per cent decline in the same period.
The company, which targets low- to middle-income consumers, is eyeing revenue growth of about 10 per cent annually, implying it will take market share from rivals FairPrice and Dairy Farm International as it hopes to open four to six stores a year in Singapore's suburbs.
"If we open four to six outlets a year, we hope to see revenue growth of about 10 per cent annually," said Mr Lim.
"Even in times of economic difficulty, we can still do well and expand. Some customers that used to buy more expensive products will trade down, benefiting us."
He added that Sheng Siong also stands to gain from the Government's plan to build more public housing over the next few years for a growing population, giving the firm the chance to open more supermarket outlets to cater to the new housing estates.
The supermarket retailer is the third largest here, with a market share of 17.5 per cent, behind FairPrice and Dairy Farm, according to brokerage firm IIFL.
Last year, it booked revenues of S$628.4 million, 0.5 per cent higher than in the preceding year.
Mr Lim said Sheng Siong plans to introduce an e-commerce service by 2014, allowing customers to order groceries on the Internet and have them delivered to their homes.
Sheng Siong posted a 33.6 per cent fall in net profit for the nine months ending in September to S$23.5 million, while its revenue slid 8.5 per cent in the same period to S$439.6 million.