Executive Summary

After months of sideways movement, Sheng Siong (OV8.SI) is finally showing signs of renewed strength. 1GT Bullish signals remain in play just as prices look to retest the $2.20 resistance, marking a potential turning point in the stock’s trend. With momentum starting to build again, traders are watching closely to see if this breakout could pave the way for a move toward $2.40.

The broader trend remains firmly intact, Sheng Siong’s long-term uptrend continues to be supported by steady fundamentals, consistent earnings, and its strong defensive position in the consumer staples sector. With five new stores opened and three more planned, plus continued demand for budget-friendly essentials amid global uncertainty, Sheng Siong’s resilient business model remains a strong anchor. If momentum follows through on the charts, this defensive favorite could soon see its next leg higher.

Sheng Siong Group Ltd (SGX: OV8) has remained one of Singapore’s most resilient consumer staples, benefitting from stable grocery demand and steady store expansion. 

Known for its defensive earnings profile, the supermarket operator continues to deliver consistent margins despite rising operating costs, while maintaining healthy cash generation and dividend payouts.

On the broader trend, Sheng Siong continues to ride a solid uptrend above its 200-day moving average (blue line), signaling that the long-term structure remains healthy. The 100-day moving average (red line) is also sloping upward, showing underlying strength in the medium term.

Over the past year, every dip near the key supports has provided strong opportunities for accumulation, a pattern that continues to play out.

After hitting a high around $2.20 in July, Sheng Siong went through a mild pullback, but buyers stepped in around the $2.00 psychological support, where currently the 100-day moving average resides as well. The stock has since regained upward traction and is now approaching the $2.20 resistance.

1GT Bullish signals appeared in Jun, and continued to play out. With prices attempting to hold above the rising short-term 20-day moving average, traders are watching for a clean breakout above $2.20, which could open the path toward $2.40 , the next key resistance and potential upside target.

For traders looking to position, a more conservative approach would be to accumulate on dips near the $2.00 psychological support, with a protective stop-loss placed just below $2.00 in case of short-term weakness.

Those taking a more aggressive stance could consider entering on a confirmed breakout above $2.20, riding the next leg higher toward the $2.40 target.

If momentum remains strong and prices can sustain above $2.40, it may pave the way for Sheng Siong to challenge new highs in the sessions ahead supported by its steady fundamentals and consistent trend strength.

So, how does one take a position in Sheng Siong to ride the uptrend further with lower initial capital outlay?

Investors who wish to be exposed to potential upside moves in Sheng Siong shares can consider using a Sheng Siong call warrant to magnify the share price return using lesser capital and without the risk of margin calls. There are currently two call warrants tracking Sheng Siong shares listed in the market and no put warrants.  

To find out how each of the call warrants will perform given Joey’s view on Sheng Siong shares, one can use the Warrant Selector.

Given that one is bullish on Sheng Siong shares, click on the call option after selecting “Sheng Siong” from the underlying drop down:

If one intends to enter into a bullish position only if Sheng Siong stays above $2.20, e.g. $2.25, type it into the last price to see the theoretical price of the two warrants if Sheng Siong were to trade to $2.25 today.

Type in the intended exit level of $2.40 and increase the number of weeks to observe how the two Sheng Siong call warrants would perform:

In this case, assuming all factors remain unchanged, If Sheng Siong took 3 weeks to increase 6.7% from $2.25 to $2.40, the first call warrant NPUW (https://warrants.com.sg/tools/livematrix/NPUW) will gain around 5 times more – 33.3% from SGD 0.018 to SGD 0.024, while the second call warrant KCKW (https://warrants.com.sg/tools/livematrix/KCKW) will increase 7.5 times more i.e. +50% to SGD 0.024. Keep increasing the number of weeks and one would find that the percentage gains on both call warrants will erode. This is due to the effect of time decay – the costs of holding a warrant, where the longer one holds onto the warrant, the higher the holding costs.

The maximum length of time one can hold onto the second warrant will be 10 weeks, as it would expire in 11 weeks, while the maximum holding period for the first warrant NPUW would be 11 weeks as it is only magnifying the share price move by less than 2 times at this point with a mere 11.1% gain to SGD 0.020:

Week 10:

Week 11:

As such, whether to choose NPUW or KCKW to trade Sheng Siong shares depends on an investor’s risk profile and view on the shares. 

The thing to note about holding warrants until expiry is that one can end up with zero warrant value if the stocks close at a settlement price equal to or below the warrant’s strike level. For KCKW, the strike level is $2.15, meaning if Sheng Siong shares settled at $2.15 or lower on expiry date, one will get nothing back at expiry, but if one were to cut losses on the 10^th week before the warrant expired and provided Sheng Siong share price is at $2.15 or above, there will be a residual value of $0.003 left due to time value – which becomes zero at expiry.

Investors should therefore aim to exit from warrant positions – whether to take profits or cut losses, before the last trading date (5 business days before the expiry date). 

Investors may notice by now that leverage works both ways. Whilst warrants can be used to magnify one’s exposure and potential gains, losses can also be magnified when Sheng Siong shares fail to achieve the target exit price within the maximum holding period.

The sharing on how one can take a position using warrants has been contributed by Macquarie Warrants Singapore who is the issuer of these warrants listed on SGX.

About the Author - Joey Choy

Joey is Singapore’s renowned mentor on how to make an income by trading the stock market, an author and one of the most-watched, quoted and followed stock trading trainers in Singapore. Over the years, he has conducted numerous full house seminars, enriching thousands to trade more profitably. 

Joey’s come back story from a S$740k debt has been featured in the Business Times and inspired thousands in Singapore. In less than 3 years, he is highly regarded as one of the Top Tier Remisiers (Stock Brokers) and Traders, bagging numerous yearly awards like Top Trading Representative and Top CFD Achiever every year from 2014 to 2023 in Phillip Securities.

More about Joey here

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- Joey

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