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$Sheng Siong(OV8.SI)$ $DFIRG USD(D01.SI)$ $Kimly(1D0.SI)$

Today I will cover Stock that benefit from CDC voucher and how CDC help Community. The Singapore Government's distribution of S$300 in Community Development Council (CDC) vouchers to households is designed to alleviate living costs and stimulate local spending.

CDC Boost Local Stock

Increased Spending on Groceries A significant portion of the CDC vouchers can be used at supermarkets, making Sheng Siong a key beneficiary. Households are likely to spend vouchers on essential items like fresh produce, dry goods, and household products, all of which Sheng Siong offers.

Increased Customer Traffic The voucher scheme encourages families to shop locally, which may lead to higher footfall at Sheng Siong outlets. The convenience and wide reach of Sheng Siong stores across Singapore make them a preferred choice for voucher redemption.

Boost in Revenue With more customers using vouchers to purchase necessities, Sheng Siong can expect an uptick in sales during the voucher redemption period. The increased spending could translate into stronger quarterly revenue and profits.

Strengthened Market Position Sheng Siong's competitive pricing and focus on fresh and affordable groceries make it an attractive option for households looking to maximize the value of their vouchers. This could enhance customer loyalty and brand recognition.

Potential for Future Expansion The additional revenue may allow Sheng Siong to invest in expanding its store network or improving its services, further strengthening its market presence.

Stock Implications The CDC voucher scheme can act as a catalyst for short-term stock price appreciation due to anticipated revenue growth. Investors may view Sheng Siong as a stable stock with potential for consistent returns, especially during economic periods when household support measures are in place.

This initiative can positively impact certain publicly listed companies in Singapore, particularly those in the retail and supermarket sectors. Here are some stocks that may benefit:

1. Sheng Siong Group Ltd (SGX: OV8)

As one of Singapore's largest supermarket chains, Sheng Siong stands to gain from the vouchers, especially since a portion is designated for supermarket spending. The increased footfall and spending can boost their revenue.

Sheng Siong, one of Singapore's largest supermarket chains, operates 74 outlets across the island.

The group offers a diverse range of products, including live, fresh, and chilled produce, as well as general merchandise such as toiletries and essential household items. It is one of eight supermarkets where grocery CDC vouchers can be redeemed.

In the first nine months of 2024 (9M 2024), Sheng Siong reported strong financial results. Revenue increased by 4% year-on-year to S$1.1 billion, while gross profit rose 6% year-on-year to S$328.8 million. The gross profit margin improved from 29.9% in 9M 2023 to 30.5% in 9M 2024. Net profit reached S$109.1 million, marking an 8.7% year-on-year growth. The business also generated S$141.3 million in free cash flow, up nearly 13% year-on-year.

During 9M 2024, Sheng Siong opened four new stores and aims to maintain a target of opening at least three new outlets annually. It opened a fifth store at Block 512 Bishan Street 13 and plans to inaugurate another at Toa Payoh by the end of 2024, bringing the total to six new stores for the year.

Additionally, four HDB tender results are pending, which could contribute to Sheng Siong’s store expansion plans in 2025.

2. Dairy Farm International Holdings Ltd (SGX: D01)

DFI Retail Group is a prominent Asian retailer with approximately 11,000 outlets and a workforce exceeding 200,000 employees.

The group owns renowned brands such as Giant, Cold Storage, 7-Eleven, and Guardian Health and Beauty. It also has operations in the home furnishing and restaurant sectors. CDC vouchers can be redeemed at Cold Storage and Giant stores in Singapore.

For the first half of 2024 (1H 2024), DFI Retail Group demonstrated resilient financial performance. Revenue saw a slight 4% year-on-year decline to US$4.4 billion, but underlying net profit more than doubled to US$76 million. Reflecting this profit growth, the company raised its interim dividend by 17% year-on-year to US$0.035.

In its third-quarter 2024 (3Q 2024) business update, the group reported mixed results. Hong Kong retail sales fell 10% year-on-year due to cost-of-living pressures affecting consumer sentiment. However, despite a 3% year-on-year decline in subsidiary sales, DFI Retail Group achieved a 4% year-on-year growth in underlying profit for the quarter.

Additionally, the group recently finalized an agreement with MINISO Group (NYSE: MNSO) to divest its 21.08% stake in Yonghui Supermarket for RMB 4.5 billion.

3. Kimly Limited (SGX: 1D0)

As a leading operator of coffee shops and food outlets, Kimly could benefit from the portion of vouchers allocated for spending at hawkers and heartland merchants.

DFI Retail Group is a prominent Asian retailer with approximately 11,000 outlets and a workforce exceeding 200,000 employees.

The group owns renowned brands such as Giant, Cold Storage, 7-Eleven, and Guardian Health and Beauty. It also has operations in the home furnishing and restaurant sectors. CDC vouchers can be redeemed at Cold Storage and Giant stores in Singapore.

For the first half of 2024 (1H 2024), DFI Retail Group demonstrated resilient financial performance. Revenue saw a slight 4% year-on-year decline to US$4.4 billion, but underlying net profit more than doubled to US$76 million. Reflecting this profit growth, the company raised its interim dividend by 17% year-on-year to US$0.035.

In its third-quarter 2024 (3Q 2024) business update, the group reported mixed results. Hong Kong retail sales fell 10% year-on-year due to cost-of-living pressures affecting consumer sentiment. However, despite a 3% year-on-year decline in subsidiary sales, DFI Retail Group achieved a 4% year-on-year growth in underlying profit for the quarter.

Additionally, the group recently finalized an agreement with MINISO Group (NYSE: MNSO) to divest its 21.08% stake in Yonghui Supermarket for RMB 4.5 billion.

How CDC Help Community

The Singapore Government's Community Development Council (CDC) Vouchers are designed to support households while fostering community spirit and aiding local businesses. Here’s how they can be beneficial to your life:

Cost Savings for Households: Direct Financial Relief: The vouchers provide households with financial support to offset daily expenses, particularly for essentials like groceries and dining. Budget Supplement: They ease the financial burden, especially for low-income families, allowing households to allocate funds to other important needs like education or savings.

Support for Local Businesses: Boost to Small Enterprises: By encouraging residents to spend the vouchers at heartland merchants and hawkers, the scheme promotes small businesses and traditional trades. Economic Resilience: It helps sustain neighborhood shops and stalls, ensuring they remain viable during challenging economic times.

Community Bonding: Promotes Heartland Unity: The vouchers encourage residents to shop locally, creating more interactions between neighbors and fostering a sense of community. Local Engagement: Participation in the scheme connects residents with their local environment, reinforcing ties to the neighborhood.

Encouragement of Digital Inclusion: E-voucher Adoption: The CDC vouchers are accessible digitally via the LifeSG app or Singpass, promoting the use of digital platforms. Digital Literacy: It provides an opportunity for residents to become more familiar with technology, which can be useful in other aspects of life.

Environmental Benefits Paperless Initiative: The digital nature of the vouchers reduces paper waste, contributing to Singapore’s sustainability goals.

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