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Singapore is on a Path to a New Normal: 4 Blue Chips Stocks That Have Taken Off

·4-min read
Aircraft Engine on Runway
Aircraft Engine on Runway

Over the weekend, Singapore’s Prime Minister, Lee Hsien Loong addressed the nation and laid out a plan for the country to move towards a new normal.

Investors, you may want to take note. 

Rather than expending its efforts to stamp out the COVID-19 virus, the new strategy involves co-existing with the virus and ensuring that the healthcare system does not become overwhelmed.

With nearly 85% of its population vaccinated, the country will need around three to six months to “acclimatise” and get all the proper resources and processes in place.

In addition, the Vaccinated Travel Lane (VTL) scheme has now been extended to nine other countries, up from just two in early September.

In short, the road to recovery now looks much more certain.

Here are four blue-chip stocks that have reacted positively to the news.

Singapore Airlines Limited (SGX: C6L)

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

The group has an operating fleet of 168 aircraft as of 31 March 2021.

The announcement of the additional VTLs has propelled SIA’s stock price up 7.6% yesterday to S$5.52, close to its 52-week high of S$5.72.

The airline has been progressively building up its network since the onset of the pandemic and has seen passenger numbers rising for six consecutive months since March this year.

Meanwhile, its financial numbers are also looking much healthier.

For its fiscal 2022 first quarter (1Q2022) ended 30 June 2021, the group reported a 52.2% year on year jump in revenue to S$1.3 billion.

Operating loss for the quarter narrowed significantly to just S$274 million from S$1 billion a year ago.

As Singapore opens up its borders to more countries, SIA should report higher passenger numbers as it continues to add more routes to satisfy pent-up demand for travel.

SATS Ltd (SGX: S58)

SATS is a provider of gateway services and catering for airlines, including SIA.

The group serves customers in over 55 locations and 14 countries spanning the Asia Pacific, the UK, and the Middle East.

The airline caterer saw its shares jump by 3.8% yesterday to S$4.33.

Like SIA, the group has already reported improving operating numbers for 1Q2022.

The number of flights handled more than doubled year on year to 13,900, passengers handled surged more than four-fold to 900,000, and meals served increased by 37.1% year on year to 12.9 million.

SATS also reported a core net profit of S$6.4 million during its latest quarter, demonstrating the resilience of its business model.

With more flights being added by its major customer SIA, SATS should continue to report better numbers in the quarters ahead.

On the flip side, its CEO Alex Hungate is poised to leave the group after eight years at the helm.

SIA Engineering Company Ltd (SGX: S59)

SIA Engineering Company Ltd, or SIAEC, provides line maintenance, technical handling and a range of maintenance, repair and overhaul (MRO) services for aircrafts.

The group also provides fleet management services to a wide variety of airlines.

SIAEC’s share price climbed by 3.3% to S$2.17 on news of the additional VTLs.

For 1Q2022, the number of flights handled at its Singapore base nearly doubled year on year.

Revenue inched up 5.7% year on year to S$125.3 million while operating loss declined to just S$2.9 million.

Net profit, however, surged by 35.5% year on year to S$14.5 million.

The MRO specialist has suspended its dividend payments for the fiscal year 2021 but could restore them if it is able to mount a turnaround.

Last month, SIAEC signed a maintenance agreement with Hawaiian Airlines to expand airframe maintenance services for its fleet of A330-200 Airbuses, proving that the group still has what it takes to grow its business.

Genting Singapore Limited (SGX: G13)

Genting Singapore owns and operates the Resorts World Sentosa integrated resort (IR) that houses around 1,600 hotel rooms, a casino, and Asia’s only Universal Studios theme park.

The IR operator saw its shares jump by 4.8% yesterday to S$0.76.

The group reported significantly better numbers for its fiscal 2021 first half (1H2021).

Revenue increased by 24% year on year while it reversed its operating loss to report an operating profit of S$121 million.

Net profit clocked in at S$88.2 million, a sharp reversal from the S$116.7 million net loss a year ago.

With visitor arrivals poised to increase as the VTLs get underway, Genting Singapore should see its fortunes improve.

We found 5 SGX stocks that can pay you dividends for life. Find out their names, and why at least one of them should sit in your portfolio in our special FREE report. Click here to download the report now.

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

The post Singapore is on a Path to a New Normal: 4 Blue Chips Stocks That Have Taken Off appeared first on The Smart Investor.

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