One of the key beneficiaries of the 2-month circuit breaker measures implemented by the Singapore government to contain the community spread of Covid-19 is Sheng Siong Group Limited (SGX:OV8), where we saw hordes of people rushing to the supermarket to shop for groceries.

During its first quarter results update, the Group reported that its revenue climbed 30.7% on a year-on-year basis to S$328.7m (1Q FY2018: S$251.4m) and its net profit attributable to shareholders jumped by 48.2% in the same time period to S$28.7m (1Q FY2018: S$19.4m). As a result of its superior performance, the Group announced that it will be rewarding its staff an additional month of salary as a bonus for their hard work (you can check out the news article from The Straits Times here.)

As a result of the Covid-19 pandemic, Sheng Siong’s share price soared as well – from a low of S$1.00 in mid-March to a new 52-week high of S$1.74 in end-June – that’s a jump by a whooping 74.0%! (congratulations to those who enjoyed this gain in just under 3 months)

So, having said that, is there further growth in Sheng Siong’s share price in the near-term? In this post, I will be sharing with you my personal technical analysis of the supermarket chain’s share price movements for educational purposes.

Overall Share Price Movement of Sheng Siong Group over the Years

The following is Sheng Siong Group’s weekly share price movement since its listing back in August 2011 – as you can see below, the overall trend has been up:

Since its Listing around August 2011, Sheng Siong's Share Price Movements has been on an Upward Moving Trend
Since its Listing around August 2011, Sheng Siong’s Share Price Movements has been on an Upward Moving Trend

Zooming into the Recent Share Price Movements of Sheng Siong Group

The following is Sheng Siong Group’s recent share price movements (on a daily timeframe):

Sheng Siong Group's Recent Share Price Movements
Sheng Siong Group’s Recent Share Price Movements

As you can see from the daily chart above, from a low of S$1.00 on 17 March 2020 (around the time where STI hit a low of 2,209 points as well), Sheng Siong’s share price have bounced back up almost immediately from there, where it hit a new 52-week high of S$1.74 on 23 June 2020 – at the same time, the 14-day RSI went above 70.0 (and overbought territories), and the share price retraced the following day.

As at time of writing, its share price is currently at S$1.61, one-cent below the support line of S$1.62. Despite its share price falling under the support line.

My interpretation of the 3 technical indicators which I’ve used (i.e. MACD, RSI, and stochastic) is as follows:

MACD: While it is still in an uptrend position, but it seems that it is about to reverse into a downtrend

RSI: It is still above 50.0, implying that the trend is still up

Stochastic: Currently in a downtrend, as %K have curved under %D

In the near-term, if the share price of the supermarket chain were to continue to weaken, it could fall to around the next support line at S$1.54 before recovering.

On the other hand, if the share price is able to once again break above the S$1.62 support-turned-resistance line on a high volume, it could once again rise up to the next resistance line at S$1.70.

Catalyst to Sheng Siong Group’s Share Price Movements

One near-term catalyst to Sheng Siong Group’s share price movement is the release of its second quarter results (in the past few years, they are released around end-July), where it is going to be a much stronger one on a quarter-on-quarter, as well as on a year-on-year basis – as the period under review (between 01 April and 30 June) encompasses the entire circuit breaker period, with buying volume in supermarkets by Singaporeans are at its highest. A superior set of results may result in the share price being pushed to another new high.

Another catalyst to the supermarket chain’s share price would be any announcements relating to the increase in its interim dividend payout (in a form of special dividends) as a result of its strong performance – it could also spur an upward movement in its share price beyond its current 52-week high of S$1.74.

Disclaimer: The above technical analysis share about Sheng Siong Group Limited is for educational purposes only. It does not represent any buy/sell recommendation for the company’s shares. Please do your own due diligence before you make any investing/trading decisions. Finally, I do not own shares to Sheng Siong Group Limited at the time of writing.

 

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