For investors and consumer everywhere, prices are rising. Singapore’s headline inflation was up 5.7% from a year ago in April, faster than the estimate of 5.5%.
Meanwhile, core inflation, which excludes private road transport and accommodation costs, rose 5% during the same period, which was still higher than the estimate of 4.7%.
While investors have no control over how high prices can continue to rise and how long inflation will last, we can take a proactive approach in our response.
So, with that I believe that these four Singapore stocks can help investors to crush inflation.
1. SIA
Singapore Airlines Ltd (SGX: C6L), or simply known as SIA, saw a strong recovery as demand for air travel rebounded with the resumption of international travel.
Revenue for FY2023 more than doubled to S$17.8 billion while net profit hit a record high of S$2.16 billion.
SIA benefitted from Singapore’s proactive measures in the management of the pandemic and was among the first countries to begin reopening its borders.
The airline is also not just looking at survival but intends to capitalise on the biggest disruption in aviation history over the last three years in order to expand its global presence.
While most airlines in the region have been structurally damaged by COVID, SIA has emerged as the airline of choice for many who want to travel in the Southeast Asia region.
SIA is already operating at 47% of its pre-pandemic level capacity at the end of March as compared to only about 18% of the capacity for airlines in the Asia-Pacific region.
Some of SIA’s routes, including those to London and New York, are already back to normal and even adding services.
Part of this was due to SIA’s ability to restore its capacity faster than some rivals because most of its pilots stayed on by taking pay cuts during the pandemic, and it could more easily bring back cabin crew who had taken temporary jobs in other sectors.
Riding on the recovery momentum, SIA noted that demand for air travel remains robust in the first quarter of FY2024, underpinned by the recovery in air travel in East Asia, while supply remains limited.
2. Genting Singapore
Genting Singapore Limited (SGX: G13), a leading gaming and integrated resort development company, is another company poised to benefit from the return of international travellers to Singapore.
During Q1 FY2023, Genting Singapore reported strong earnings growth as revenue and EBITDA both jumped by 54% and 56%, respectively.
As international travel gradually returns to pre-pandemic levels, Genting Singapore is expected to see a rebound in its business.
Its expansion strategy also remains intact and with a strong net cash position and operating cash flow, I believe the recovery will pave the way for Genting Singapore to increase its dividend going forward.
3. Sheng Siong
Sheng Siong Group Ltd (SGX: OV8), a renowned supermarket chain in Singapore with 68 stores, is also a good investment option for investors during inflationary and recessionary times.
The company’s strong local presence and resilient business model, proven by its performance even during the pandemic, could potentially drive future dividend growth.
Despite a 0.4% decrease in revenue to S$356.5 million in Q1 FY2023, gross profit marginally rose by 0.1% due to an improved sales mix.
Sheng Sion’s net profit dropped by 5.2% to S$33.4 million.
Nevertheless, due to the high base effect in Q1 FY2022 and expansion plans, the outlook for 2023 remains optimistic.
The company is set to open its fifth store in Kunming, China, and enhance its higher-margin product sales and supply chain efficiency.
Sheng Siong’s commitment to expanding its footprint and enhancing operational efficiencies could also support an increased dividend payout going forward.
4. UOB
United Overseas Bank Ltd (SGX: U11) or UOB, is Singapore’s third-largest bank by market capitalisation.
It has benefitted from the rising interest rate environment and posted record-high earnings of S$1.6 billion during Q1 FY2023.
If interest rates were to hover higher for longer, UOB could enjoy higher net interest income for the rest of 2023.
This will help investors to beat inflation since it is likely that UOB will pay out more dividends with its better earnings.
The lender also has a strong capital adequacy ratio and conservative lending practices, which should protect UOB from the latest bank collapse contagion in the US.
Stay ahead of inflation by investing in quality
These are some of the Singaporean stocks that have strong track records and are resilient amid an inflationary environment.
With a potential increase in their dividends this year and some being a beneficiary of the recovery of the tourism industry, investors could stay ahead of the inflation curve with these Singapore companies.
However, investors should bear in mind that investing always carries risks.
Before making any investment decisions, comprehensive due diligence and risk assessment should be undertaken.
I truly believe that a diversified portfolio of companies that offer exposure to economic recovery, resilient business models and strong dividend track records will help investors to stay ahead.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
