There’s an economic storm looming as Prime Minister Lee Hsien Loong warned of an impending recession that may hit Singapore in the next two years.
The solution to these worries? Look for safe-haven stocks where you can park your money and enjoy a good night’s sleep.
Your CPF account is an almost risk-free place where you can squirrel away some cash to earn an interest of 2.5%.
However, if you’re looking for better returns, the CPF Investment Account (IA) is a place where you can purchase safe and dependable stocks that can tide you through a downturn.
Raffles Medical Group Ltd (SGX: BSL)
Raffles Medical Group Ltd, or RMG, is an integrated healthcare provider with a comprehensive range of services ranging from primary to tertiary care.
The group operates three hospitals and over 100 multi-disciplinary clinics and is present in 14 cities within five countries.
RMG reported a good set of earnings for fiscal 2021 (FY2021), with revenue climbing 27.4% year on year to S$723.8 million.
The increase was due to the provision of services to assist the government with various COVID-19 initiatives such as PCR testing and vaccinations.
Operating profit increased by 37.2% year on year to S$121.3 million while net profit improved by 27.7% year on year to S$84.2 million.
RMG also generated a free cash flow of S$107.3 million, up 46.8% year on year from S$73.1 million last year.
A total FY2021 dividend of S$0.028 was paid out, slightly higher than the S$0.025 paid out in FY2020.
RMG now has a total of three hospitals operating in China and is cautiously optimistic that these hospitals will see increased patient loads.
Ascendas REIT (SGX: A17U)
Ascendas REIT, or A-REIT, is an industrial REIT with a portfolio of 220 properties worth S$16.4 billion as of 31 March 2022.
These properties are spread out across Singapore, Australia, the US and the UK.
Being Singapore’s largest industrial REIT and listed since 2002, A-REIT thus has a long track record and is stable and dependable.
The REIT’s investment properties has grown from just S$0.6 billion in 2003 to its current S$16.4 billion.
At the same time, distribution per unit (DPU) has increased at a compound annual growth rate of 3.6% per year over the same period to S$0.015258 for FY2021.
The REIT maintains aggregate leverage of 36.8% with a low cost of debt of 2.1%.
The interest coverage ratio remained healthy at 5.7 times and nearly 80% of the REIT’s debt is on fixed rates, thus mitigating against increases in interest rates.
Portfolio occupancy remained healthy at 92.6% while rental reversion was positive at 4.6% for 1Q2022.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The group is a multi-asset exchange that offers a wide spread of securities for investors and portfolio managers.
For its fiscal 2022 first half (1H2022) ended 31 December 2021, SGX’s revenue stayed flat year on year at S$522 million.
Net profit, however, dipped by 9% year on year due to higher staff costs and technology expenses.
Despite the lower profit, SGX still maintained its S$0.08 per share interim dividend.
The group enjoys a natural monopoly and has also rolled out initiatives such as the introduction of special purpose acquisition companies, or SPACs, to liven up trading volumes on the bourse.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong is one of the largest supermarket chains in Singapore and operates a total of 65 outlets on the island.
The group offers a broad selection of merchandise to customers, including more than 1,500 products under its 23 house brands.
For the first quarter of 2022 (1Q2022), Sheng Siong’s revenue edged up 6% year on year to S$358 million.
Gross profit increased 9.8% year on year.
In the process, gross profit margin inched up from 27.7% in 1Q2021 to 28.7% in its latest quarter.
Net profit climbed 13.9% year on year to S$35.2 million.
Sheng Siong also generated a free cash flow of S$20.1 million.
The group secured the leases for three new stores in FY2021, of which two will open in the first half of 2022.
In general, Sheng Siong is targeting to open three to five new stores per year by focusing on areas where it does not have a presence.
In areas where the group is not physically present, it will build up its e-commerce initiatives to provide its products to a wide group of customers.
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Disclaimer: Royston Yang owns shares of Singapore Exchange Limited and Raffles Medical Group.
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