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4 Blue-Chip Stocks Engineering a Turnaround in 2022

·4-min read

The pandemic has been tough on companies in the telecommunications, airline, and oil and gas sectors.

Even blue-chip stocks have not been spared.

Faced with falling demand amid movement restrictions, these companies have reported declining revenue and earnings in 2020.

However, economic conditions are improving and the outlook has become brighter.

These same businesses could see a rebound in revenue and profit as the recovery gains momentum.

Here are four blue-chip stocks that could possibly turn around in 2022.

Keppel Corporation Limited (SGX: BN4)

Keppel Corporation is an offshore and marine conglomerate with four distinct divisions — energy and environment, urban development, connectivity, and asset management.

The group initially faced uncertainty back in early 2020 as oil prices collapsed due to the onset of the pandemic.

However, Keppel has since evolved its business to cope with the oil price fallout.

In May 2020, the group came up with its Vision 2030 with plans to actively develop and invest in new growth engines.

Then, in February last year, it announced that it was restructuring its offshore and marine division with an intention to exit the business.

And in July, the group announced that it was exploring a possible combination with Sembcorp Marine Ltd (SGX: S51).

These moves have benefitted Keppel as it announced a stronger set of earnings for its fiscal 2021 first half (1H2021) and also tripled its interim dividend to S$0.12 per share.

2022 could see more progress made on its growth initiatives as the group rides on the global recovery.

Singapore Airlines Limited (SGX: C6L)

Singapore Airlines Limited, or SIA, is Singapore’s flagship airline.

The group has faced tough conditions in the last two years as borders shut and air travel was curtailed.

A brighter outlook could be on the horizon, though.

600,000 passengers flew on both SIA and Scoot flights in December, double the number in November and up seven-fold from a year ago.

The uptick in passenger numbers can be attributed to the introduction of the vaccinated travel lanes (VTLs) by the government to boost the industry.

Due to the Omicron variant, VTL quotas and ticket sales will be temporarily reduced after 20 January, but the momentum from the early success of the VTLs should encourage a sustained recovery for the airline sector.

SIA was also successful in raising US$600 million in a recent notes issuance that should see the airline through with sufficient liquidity to enjoy the recovery.

SATS Ltd (SGX: S58)

SATS is a leading provider of gateway services and food solutions for airlines and cruise companies.

The group has customers in 55 locations within 14 countries across the Asia-Pacific, the UK, and the Middle East.

In 2020, the ground handler reported significant losses and halted its dividend payments as air travel was curtailed.

Recently, SATS reported an encouraging set of earnings for its fiscal 2022 first half ended 30 September 2021.

Revenue jumped by 29.3% year on year to S$569.5 million while core net profit came in at S$13.2 million, reversing a S$45.3 million loss a year ago.

Operating statistics also painted an increasingly encouraging picture.

Meals served jumped by 27.2% year on year to 26.3 million while cargo tonnage surged by 64.4% year on year to 808,300 tonnes.

SATS also outlined its growth plans during its recent Capital Markets Day.

The group will pivot away from travel-related revenue and expand its food solutions’ reach.

Just two months ago, it broke ground on its largest central kitchen in India, utilising both automation and smart technology to ensure a high level of food quality.

Singtel (SGX: Z74)

Telecommunication (telco) group Singtel faced a tough challenge when the pandemic first broke out in 2020.

The decline in roaming revenue had dented the telco’s earnings for 2020.

However, the group has been busy in the last 12 months.

Last May, it announced a strategic review to shed underperforming businesses and identify new areas for growth.

Then, in October, the telco announced the A$1.9 billion sale of its Australian tower assets to unlock value.

Singtel will recognise a gain of around S$400 million from this divestment.

Last week, Bloomberg reported that the telco was mulling options for its Australian fibre assets, although Singtel was quick to add that there was no certainty a transaction would take place.

2022 could be the year where we see the telco making more moves to divest assets to realise more value for shareholders.

Singtel could also ramp up its investments in promising areas based on its ongoing strategic review.

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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.

The post 4 Blue-Chip Stocks Engineering a Turnaround in 2022 appeared first on The Smart Investor.

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