The current earnings season showcases select Singapore stocks that are shining brightly, despite rising interest rates and inflationary pressures.
As we step into August 2023, I have identified five high-potential stocks on the Singapore Exchange that are worth your attention.
Each company demonstrates a strong, sustainable business model, a well-thought-out strategy, and quick and effective execution.
These gems of Singapore’s stock market offer a mix of growth and value, across diverse sectors. In doing that, they give you an opportunity for well-rounded portfolio diversification.
So, if you’re looking for investment opportunities in Singapore, these top stocks should definitely be on your radar for August.
1. DBS Group
DBS Group Holdings Ltd (SGX: D05), the largest bank in Singapore, has recently showcased robust Q2 2023 and H1 2023 results, exceeding investor expectations.
With a record net profit of S$2.69 billion, reflecting a year-on-year (yoy) increase of 48%, and a return on equity (ROE) at 19.2%, the bank’s performance has been nothing short of stellar.
The bank’s net interest margin (NIM) rose by 4 basis points (bps) quarter-on-quarter (qoq) to 2.16%, ahead of predictions.
DBS also delighted its shareholders with a surprise 14% qoq dividend increase from 42 to 48 Singapore cents.
This increase aligns with CEO Piyush Gupta’s outlook of stronger growth prospects for the year.
DBS may further enhance shareholder returns with an extra S$3 billion if it adjusts its CET-1 operating range to 12.5-13.5%.
The bank’s acquisition of Citigroup Inc’s Taiwan retail business is on track to be integrated by mid-August 2023.
However, the potential slowdown in the Fed’s interest rate hikes could mean that DBS’s NIM peaks in the second half of 2023, which investors should consider.
2. CapitaLand Integrated Commercial Trust
CapitaLand Integrated Commercial Trust (SGX: C38U), or simply known as CICT, delivered strong earnings during H1 FY2023. This came despite the prevailing economic environment.
Singapore’s largest REIT achieved yoy growth of 12.7% and 10.1% in H1 FY2023 revenue and Net Property Income (NPI), reaching S$774.8 million and S$552.3 million, respectively.
Its DPU also saw a modest yoy increase of 1.5%.
CICT’s retail division recorded a positive rental reversion of 6.9%.
The REIT’s downtown malls displayed impressive 7% growth, benefitting from increased tourist numbers and the return of the office-going population.
However, a moderation in office rental growth is expected in the second half due to potential supply and reduced demand.
With an attractive yield of 5.3% and a strong track record, CICT is a great choice for long-term investors, although rising interest rates and persistent inflation might impact returns.
3. Sheng Siong Group
Singapore’s grocery retailer, Sheng Siong Group Ltd (SGX: OV8), saw slight weakness in its H1 FY2023 earnings amid rising costs but managed to grow its revenue by 2% yoy to S$690.5 million.
This was primarily fuelled by the addition of new stores.
While net profit declined by 2.9% due to rising staff and utility costs, Sheng Siong improved its gross profit margin from 29.4% to 29.7%.
With the Housing Development Board’s (HDB) upcoming tender of six new supermarket outlets, Sheng Siong is well-positioned for further growth.
Sheng Siong is a viable pick for long-term investors as a defensive play with robust growth potential and a 3.5% forward dividend yield.
4. Genting Singapore
Genting Singapore Limited (SGX: G13)’s recent dip following surprisingly subdued Q1 2023 results makes the company an attractive investment opportunity for investors.
The recent Q2 2023 earnings results of its Singaporean competitor, Marina Bay Sands (MBS), continue to point towards a recovery for the casino operator.
MBS’s parent company, Las Vegas Sands Corporation (NYSE: LVS) reported that MBS reached another record level of mass gaming revenue in Q2 FY2023, as adjusted property earnings surpassed pre-Covid-19 levels.
MBS reported impressive results, with net revenues of US$925 million and an adjusted EBITDA of US$432 million.
This could signal a positive spill-over effect for Genting Singapore.
Its integrated resort in Singapore, Resorts World Sentosa, is expected to see a recovery in earnings.
Gross gaming revenue for Genting Singapore is already rebounding and has reached more than 90% of pre-COVID levels due to a quick mass market recovery.
While we have seen a slower-than-expected recovery of Chinese travel, this recovery will continue for the rest of the year and could aid Genting Singapore’s earnings in the coming quarters.
A notable increase in visitors from Greater China to Singapore has been observed, up from 148,000 in May to 167,000 in June 2023.
These visitors comprise approximately 44% of the 2019 monthly averages, while other regions have also significantly recovered.
5. CapitaLand Ascott Trust
CapitaLand Ascott Trust (SGX: HMN), or CLAS for short, is another stock that investors can consider buying in August 2023 following impressive earnings for H1 FY2023.
In H1 FY2023, the trust delivered a robust financial performance, with a significant 19% yoy increase in its distribution per stapled security and a 31% surge in gross profits.
These impressive figures, coupled with a 30% yoy revenue spike to S$346.9 million, can be largely attributed to the revival in global travel demand and contributions from new properties.
While the share price has come down following the announcement to raise funds of up to S$303.1 million, we believe that the funds raised to acquire three lodging assets in prime locations of London, Dublin and Jakarta, will add value and sustainable earnings in the long term.
CLAS will issue 191.8 million new stapled securities through a private placement at $1.043 apiece and another 100.5 million through a preferential offering at $1.025 per new stapled security to raise total gross proceeds of $303.1 million.
While some monitoring may be required for the revenue gap and the AEI funding, the projected increase in valuation provides a reassuring outlook.
The balance sheet of CLAS will also strengthen further once the deal is completed.
The trust’s multi-country portfolio, chiefly in Asia Pacific, further reinforces its resilience.
With 70-75% of its portfolio invested in serviced residences and hotels, and 25-30% in extended-stay accommodation, CLAS stands to gain immensely from the travel sector’s recovery.
Currently, CLAS is trading at a forward dividend yield of 5.2%. This blend of stability and growth makes CLAS an enticing choice for investors, particularly those seeking stable dividends.
Looking for growth and value
These five Singapore stocks have been highlighted for investors seeking strong, sustainable companies with effective execution and promising strategies.
DBS, CICT, Sheng Siong, Genting Singapore and CLAS are among the Singapore stocks that offer these attributes in August and beyond.
They offer growth and value across various sectors, providing opportunities for portfolio diversification.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
