Solid as a Rock: 4 Singapore Blue-Chip Stocks to Fortify Your Investment Portfolio
It’s a welcome sight to see airports chock full of people once again as borders reopen.
Pent-up demand remains strong for holidays and cruises as many are keen to stretch their muscles abroad after being cooped up for more than two years.
Despite the surge in consumerism, dark clouds are gathering on the horizon.
Singapore’s high core inflation of 5.5% in January this year threatens to dampen spending while surging interest rates are inflicting pain on borrowers and indebted businesses.
Prime Minister Lee Hsien Loong has also warned that this year or the next could see a recession hit our shores.
During times of uncertainty, you should lean on blue-chip names with solid financials to help your portfolio weather the storm.
Here are four Singapore blue-chip stocks whose businesses are solid as a rock.
Wilmar International Limited (SGX: F34)
Wilmar is an integrated agri-business group with over 500 manufacturing plants and an extensive distribution network covering around 50 countries and regions.
The group reported a strong set of results for 2022 as revenue rose 11.6% year on year to US$73.4 billion.
Wilmar’s tropical oils business saw a good performance while its sugar merchandising segment also logged better margins.
As a result, net profit jumped 27.1% year on year to US$2.4 billion.
Excluding one-off items and fair value changes, core net profit would have improved by 31.3% year on year to US$2.4 billion.
The agri-player declared a record dividend of S$0.17 for 2022 in line with its good results.
China’s reopening should help to boost Wilmar’s China division’s performance this year.
Management also intends to strengthen the integration across the group’s various segments to achieve better margins.
United Overseas Bank Ltd (SGX: U11)
United Overseas Bank, or UOB, is Singapore’s third-largest bank by market capitalisation.
The lender has been a beneficiary of the higher interest rate environment, posting a record-high net profit of S$4.6 billion for 2022.
The bank also declared a final dividend of S$0.75, 25% higher than the S$0.60 paid out a year ago.
There’s reason to be optimistic about UOB’s performance this year.
The US Federal Reserve looks poised to continue raising interest rates to combat inflation.
The bank’s net interest margin and net interest income will benefit from the increase as it can reprice its loans quicker than it needs to increase its deposit rates.
UOB also completed the acquisition of Citigroup’s (NYSE: C) Thailand and Malaysia consumer banking divisions in November last year, as part of its mega-acquisition announced in January 2022.
These countries should bring in an additional S$1 billion in revenue for 2023.
The good news is that Vietnam received confirmation that the acquisition was completed on 1 March 2023, a move that may result in a higher-than-expected revenue uplift.
Hongkong Land Holdings Limited (SGX: H78)
Hongkong Land, or HKL, is a property development, investment and management group with more than 850,000 square metres of prime luxury office and retail properties in Hong Kong, Singapore, Beijing and Jakarta.
The group’s portfolio of prime real estate gives it a strong asset base that it can rely on during tough times.
For 2022, HKL reported a slight dip in revenue from US$2.38 billion to US$2.24 billion.
Underlying net profit fell by 20% year on year to US$776 million.
Despite the decline, HKL maintained its final dividend at US$0.16, bringing the total 2022 dividend to US$0.22, unchanged from a year ago.
2023’s results should be stable as the Chinese economy opens up, but HKL’s development properties division hinges on whatever policy support measures are announced by the government there.
The group’s investment properties are expected to report stable performance this year.
Genting Singapore (SGX: G13)
Genting Singapore owns and operates the integrated resort (IR) at Resorts World Sentosa (RWS).
Opened in January 2010, the IR boasts six hotels with around 1,600 rooms, a casino, a Universal Studios theme park, as well as a variety of dining and entertainment options.
The IR operator reported a sparkling set of earnings for 2022 and also doubled its final dividend to S$0.02.
The group boasts a robust balance sheet with more than S$3.4 billion in cash as of 31 December 2022 along with minimal gross debt of just S$5.5 million.
Genting Singapore also more than doubled its operating cash flow generation to S$806.7 million last year.
Investors can look forward to the re-launch of Festive Hotel in May with 389 additional rooms added to the hotel’s inventory.
Come 2024, the Forum and Coliseum will undergo a major renovation and when completed, will offer a host of entertainment, retail, and dining options for visitors.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.
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