Sheng Siong shares drop after OCBC downgrade — even with a higher S$2.89 target

Singapore, Feb 11, 2026, 20:07 SGT

• Sheng Siong shares dropped as much as 6%, ending the day down 4.2% after OCBC downgraded its rating to “hold”.
• OCBC bumped up its fair value estimate to S$2.89 from S$2.77, pointing to a reduced cost-of-equity assumption as the reason.
• The broker pointed out Sheng Siong’s steep valuation going into its FY2025 results, which are set for release on March 2.

Sheng Siong dropped sharply on Wednesday, closing off 4.2% at S$2.73 after taking a bigger hit of 6% earlier, following OCBC’s downgrade of the Singapore grocer to “hold”. 1

Why does this call pack a punch now? Sheng Siong is about to report FY2025 results on March 2, coming off a rally that’s already pushed valuations to the limit. A downgrade here could sting more than usual, especially with investors crowding into “defensive” stocks—those considered safe bets when growth cools, since consumers keep buying the basics.

OCBC’s Chu Peng flagged the stock’s recent surge, noting it’s now priced above its usual band. She cited a 12-month forward price-to-earnings ratio of 24.8—well above the 19.6 average seen historically.

OCBC bumped its fair value estimate to S$2.89, up from S$2.77, citing a lower “cost of equity” — that’s the return investors expect for owning the stock. Chu kept her earnings projections unchanged, but said she’s holding out for more details from the FY2025 results. 2

Chu called Sheng Siong Group a defensive pick with inflation climbing and economic growth cooling. As she sees it, tighter wallets may push shoppers toward more budget-friendly groceries. She also mentioned Singapore Budget 2025’s inflation relief, citing Community Development Council (CDC) vouchers.

Chu pointed to Sheng Siong’s projected 2025 outperformance, pinning it on strong earnings visibility, the company’s defensive nature, and new market share from ongoing store growth, underpinned by CDC cash handouts and liquidity from equity-market flows. She referenced the S$5 billion Equity Market Development Programme, which is targeting higher trading activity in Singapore stocks, with S$3.95 billion allocated across nine asset managers. 3

She pointed out that Singapore retail sales climbed 2.7% year-on-year in December 2025. Supermarkets and hypermarkets? Up 4%. That suggests demand is resilient, despite some cooling in discretionary spending. OCBC is forecasting retail sales growth between 2% and 3% in 2026, according to the broker.

Sheng Siong slipped to S$2.68 just after 9 a.m., then pared back some of the drop to S$2.74 by midday. Shares ended Tuesday at S$2.85.

The downgrade draws a clear line for investors: pricey defensive stocks don’t leave much cushion for the unexpected. Valuation is already running ahead of its historical average, so if FY2025 guidance comes in soft or there’s nothing new to spark interest, shares could stay under the gun.

OCBC pointed out Sheng Siong’s stock jumped roughly 60% in 2025, well ahead of the Straits Times Index, which was up 23%. Those gains, the broker noted, were likely driven by factors that could persist into 2026—yet OCBC thinks the share price has already priced in much of the upside.