Singapore supermarket operator Sheng Siong Group has changed its mind over planned store closures, a move welcomed by a leading analyst.

According to a research note from CIMB, the retailer will “likely retain” two of three outlets earlier slated for closure in the first half of the current financial year.

While the company has reconfirmed the closure of the Woodlands store, the Jurong Superbowl and The Verge outlets will most likely continue trading.

CIMB lead analyst Jonathan Seow said the three stores together accounted for about 23 per cent of the retailer’s total gross floor area, leading to concerns the closures could undermine the positive impact of new store openings.

Reassured of the company’s footprint being maintained Seow has recommended clients “add” to their holding in the company, saying the company’s share price is currently undervalued.

Sheng Siong Group opened three stores in the second quarter of the 2016 fiscal year at Circuit Rd, Upper Boon Keng and Fernvale. Another is scheduled to commence trading at Yishun J9 in mid August.

These four locations will add 25,000 sqft of retail space, or about 6 per cent. At Yishun J9, 15,500 sqft of the total 19,000 sqft floor space has been approved for supermarket use, and the company intends to lease the remaining space to food retailers.

“Even as competitors such as Dairy Farm are consolidating stores, Sheng Siong continues to be on the lookout for new stores,” Seow said in his note.

“Management sounded cautiously optimistic when asked about its outlook, and we think the company will also be coming off a lower base as 2Q15 was impacted by SG50 promotional activities. Store specific factors would also have less of an impact with the liquor sales ban having come into effect in April 15.”