Earnings season is like report card day for companies—and for investors, it’s where expectations meet reality. Recently, two well-known Singapore-listed companies delivered very different results. One saw profits tumble sharply, while the other posted steady growth.
If you’re investing in Singapore stocks (or thinking about it), this contrast offers more than just headlines—it provides valuable, practical lessons you can apply to your own portfolio.
Let’s break it down in a way that actually helps you make better investing decisions.
What Happened: A Tale of Two Earnings Reports
On one side, Wilmar reported a significant drop in quarterly net profit despite higher revenue. The main culprit? Volatile commodity prices and weaker margins.
On the other, Sheng Siong delivered solid profit growth, supported by steady consumer demand and stronger sales.
At first glance, it might seem simple: one company struggled, the other did well. But the real insights go deeper—and that’s where smart investors pay attention.
Insight #1: Revenue Growth Doesn’t Always Mean Profit Growth
One of the biggest traps retail investors fall into is assuming that higher revenue automatically leads to higher profits.
That’s not always true—and Wilmar’s results are a textbook example.
Why This Matters
Wilmar’s revenue increased significantly year-on-year. Sounds good, right?
But profits still dropped sharply.
Why?
Because:
- Costs increased (raw materials, production)
- Margins were squeezed by commodity price swings
- Some business segments underperformed
In simple terms: they sold more, but earned less per dollar of sales.
A Singaporean Example
Think about your favourite hawker stall.
If the stall sells more plates of chicken rice but the cost of chicken doubles, the owner might actually earn less profit—even with more customers.
That’s exactly what happens with companies exposed to volatile input costs.
What Retail Investors Should Do
When reviewing Singapore stocks:
- Don’t stop at revenue numbers
- Always check profit margins
- Look at cost drivers (e.g. commodities, labour, logistics)
A company growing revenue but losing profitability is a red flag—not a green one.
Insight #2: Business Model Stability Matters More Than Growth Hype
Sheng Siong’s results highlight something many investors underestimate: the power of a stable, defensive business model.
Why Sheng Siong Performed Well
Sheng Siong operates in the supermarket business—a classic “necessity” sector.
People still need to:
- Buy groceries
- Cook at home
- Manage daily expenses
Even during uncertain times, demand doesn’t disappear.
Compare That to Wilmar
Wilmar operates heavily in commodities—like palm oil and agricultural products.
These are:
- Highly cyclical
- Influenced by global prices
- Sensitive to geopolitical and economic shifts
So while Wilmar might perform exceptionally well during commodity booms, it can just as easily face sharp downturns.
A Relatable Singapore Scenario
During periods of inflation:
- You may cut back on dining out
- Delay buying gadgets
- Reduce discretionary spending
But you won’t stop buying:
- Rice
- Vegetables
- Cooking oil
That’s why supermarket businesses tend to be more resilient.
What Retail Investors Should Do
Balance your portfolio between:
- Cyclical stocks (e.g. commodities, shipping, semiconductors)
- Defensive stocks (e.g. supermarkets, utilities, healthcare)
If your entire portfolio depends on “good times,” you’re taking on more risk than you might realise.
Insight #3: External Factors Can Override Company Performance
Even the best-run companies can struggle when external conditions turn against them.
Wilmar didn’t necessarily “fail” operationally—it was hit by factors largely outside its control.
Key External Risks Highlighted
- Commodity price volatility
- Global demand fluctuations
- Currency movements
- Geopolitical uncertainty
These risks are especially relevant for companies with international exposure.
Why Sheng Siong Was Less Affected
Sheng Siong’s business is:
- Primarily local (Singapore-focused)
- Less exposed to global price swings
- Driven by everyday consumption
This makes its earnings more predictable.
A Simple Analogy
Imagine two individuals:
- One runs a business importing goods globally
- Another runs a neighbourhood minimart
The first is more vulnerable to:
- Shipping delays
- Exchange rates
- Global demand
The second relies mostly on local foot traffic.
Both can succeed—but their risk profiles are very different.
What Retail Investors Should Do
Before investing in Singapore stocks, ask:
- What external factors affect this company?
- Are these factors predictable or volatile?
- Can the company pass costs to customers?
Understanding this helps you avoid being blindsided by earnings surprises.
Bonus Insight: Market Expectations Drive Stock Reactions
Here’s something many beginners miss: stock prices react not just to results—but to expectations.
A company can:
- Report “good” results
- But still see its stock fall
Why?
Because investors expected even better.
Conversely:
- A company can report weaker results
- But still see its stock rise
If expectations were already low.
Why This Matters for You
Don’t just read headlines like:
- “Profit up 12%”
- “Earnings down 20%”
Instead, ask:
- Was this better or worse than expected?
That’s what actually moves stock prices.
How to Apply These Lessons to Your Portfolio
Let’s bring everything together into actionable steps.
1. Look Beyond Headlines
Instead of reacting to:
- “Profit up/down”
Dig into:
- Margins
- Cost structure
- Segment performance
2. Diversify Across Sectors
Avoid putting all your money into:
- Only growth stocks
- Only cyclical sectors
Include:
- Defensive names for stability
- Growth names for upside
3. Understand What Drives Each Business
Before buying any stock, ask:
- What are its key profit drivers?
- What risks could disrupt those drivers?
4. Think Long-Term
Quarterly results matter—but they’re just snapshots.
Focus on:
- Long-term earnings trends
- Business resilience
- Competitive advantage
Final Thoughts: Smarter Investing Starts With Better Questions
The contrasting results between Wilmar and Sheng Siong aren’t just about one company doing well and another struggling.
They highlight something more important:
Not all Singapore stocks behave the same—and understanding why is your edge as a retail investor.
If you take away just three things, let them be this:
- Revenue growth doesn’t guarantee profit growth
- Stable business models can outperform in uncertain times
- External factors can heavily influence results
The more you train yourself to look beyond surface-level numbers, the better your investment decisions will become.
And over time, that’s what separates average investors from consistently successful ones.