As we look forward to a brand new year, it’s time to size up various industries and businesses to see which will continue to do well, Singapore stocks.2020 has seen a wide swath of businesses suffering from falling profits as the COVID-19 pandemic wreaked economic havoc on the world.
The second half of the year has seen a gradual recovery of sorts as businesses adjust to the new normal imposed by this crisis.As several promising vaccines are being readied for distribution around the world, businesses can look forward to a sustained recovery in 2021. Investors have witnessed a plunge in the dividends declared by numerous companies in the wake of the pandemic.As the world slowly picks itself back up again, companies may once again find the bandwidth to increase their dividend payments to investors.
Here are some companies that could see their dividends being raised in 2021.
AEM Holdings Ltd (SGX: AWX)
AEM offers intelligent system test and handling solutions to semiconductor and electronic companies.
The group has been riding on a wave of technological innovation that has seen its order book burgeon and its revenue and net profit hit new highs.
In its third-quarter business review, AEM reported that revenue jumped 93% year on year to S$161.8 million.
Net profit soared 77.4% year on year to S$24.3 million.
The group has more than doubled its interim dividend from S$0.02 to S$0.05 when it released its first-half 2020 earnings.
AEM has raised its revenue guidance for the full fiscal year 2020 to between S$500 million and S$520 million.
For context, its total revenue for the fiscal year 2019 stood at S$323 million.
Investors can expect an uplift in the group’s upcoming final dividend if it continues to report strong numbers.
iFAST Corporation Ltd (SGX: AIY)
iFAST is a financial technology company that owns a platform for the buying and selling of securities such as equities, bonds and unit trusts.
For its third quarter 2020 earnings, iFAST reported that net revenue improved by 35.7% year on year to S$22.9 million, driven by fund inflows from clients.
Net profit attributable to shareholders soared by 150% year on year to S$6.2 million.
The group’s quarterly dividend inched up slightly from S$0.0075 to S$0.008.
Group assets under administration also hit a new all-time high of S$12.59 billion as of 30 September 2020.
Last week, the group announced that it had failed to clinch a digital wholesale bank licence in its bid to become Singapore’s first batch of digital banks.
However, its core business remains strong and without the need to stump capital for the digital bank, there is a high chance that the group will raise its dividends next year.
DBS Group Holdings Ltd (SGX: D05)
DBS Group is Singapore’s largest local bank by market capitalisation.
The lender released a downbeat set of earnings for its third quarter but provided a sanguine outlook.
CEO Piyush Gupta expects a strong economic rebound once Asia recovers from the effects of the COVID-19 pandemic.
The group paid out a quarterly dividend of S$0.18 per share as part of the Monetary Authority of Singapore’s (MAS) call for banks to limit their dividend payments.
Should the recovery take place in the second half of 2021, there is a good chance that DBS can restore its quarterly dividend to the original S$0.33 per share.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
For its fiscal full-year 2020 ended 30 June 2020 (FY 2020), the group reported a record-high revenue of S$1.1 billion, up 16% year on year.
Net profit jumped by 21% year on year to S$472 million.
The bourse operator hiked its quarterly dividend by S$0.005 from S$0.075 to S$0.08, bringing FY 2020’s dividend to S$0.305.
Moving forward, SGX will pay out a total of S$0.32 per fiscal year.
FXfutures traded on the SGX showed healthy volumes. As of 16 Nov, the year to date volumes are up 8.6% year on year, reaching US$1.18 trillion.
A new record was also achieved for the SGX USD/CNH futures open interest of US$9.7 billion on 27 October.
If these derivative volumes continue to do well, and SGX enjoys higher net profits, the group could see itself raising dividends further in the fiscal year 2021.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong runs one of the largest supermarket chains in Singapore, with 64 outlets as of 30 September 2020.
The group released an upbeat set of earnings for its third-quarter business update.Revenue for the quarter increased by 29% year on year to S$327.3 million, while net profit jumped by 54.4% year on year to S$31.8 million.
Sheng Siong continued to enjoy healthy footfall and sales as many continued to telecommute. Recall that the group had doubled its interim dividend from S$0.0175 to S$0.035 back in late July when it released its first-half 2020 results.
When construction resumes after the stoppage of work due to COVID-19, Sheng Siong expects a slew of new shops to be released for tender.
Lim Hock Chee, the group’s CEO, affirms the group’s strategy of continuously looking for retail space to expand its presence within the heartlands.
Sheng Siong will continue to bid for space in areas where it does not have a presence, as it seeks to grow its total number of stores in Singapore.
Looking at the group’s sparkling set of earnings, there is a high chance that its final dividend will see a year on year increase from fiscal 2019’s S$0.018.
Singapore Airlines (SGX: C6L)
2020 has been a year to forget for Singapore Airlines (SGX: C6L). The COVID-19 pandemic has pretty much wiped out global travel and this means SIA has lost a massive chunk of its annual revenue while still needing to maintain its aircraft and its staff strength. In October 2020, SIA reported a 98.1% decline in passenger carriage compared to the year before.
Slowly and cautiously, the airline is adding flights to additional cities as demand for overseas travel may resume as a vaccine is rolled out across the world in phases.
Since its stock split on 6 May 2020 where its share price (after stock split) was $4.40, the company has generally been trading under $4. However, over the past month, SIA has been encouraged by news of vaccines being approved in multiple countries and this has boosted its share price. It’s now trading at $4.26 as of 24 December 2020.
Genting Singapore (SGX: G13)
Given that overseas tourism in Singapore is pretty much non-existing currently, the fact that Genting Singapore (SGX: G13) was able to announce that it was profitable for 3Q2020 was pretty impressive. This comes off the back of local tourism picking up in Singapore after the country went into Phase 2 and activities gradually resumed.
After its profit announcement on 14 November 2020, Genting Singapore stock price increase from $0.745 (13 November) to $0.805 (16 November). On 30 October, its share price was at $0.645. Currently, it’s trading at $0.85 (24 December).
While its current share price is still about 8.6% lower than its price at the start of the year ($0.93), investors would be encouraged to see that despite being in one of the worse hit sectors, Genting Singapore has been able to remain resilient. This bodes well for the company in 2021, when we can expect a vaccine to reduce the COVID-19 outbreak, allowing more people to resume leisure activities, both within Singapore and overseas.
ComfortDelGro (SGX: C52)
Like Genting Singapore, ComfortDelGro (SGX: C52) reported a net profit of $21.7 million for 3Q2020. While this was significantly lower compared to the $70 million profit it made in 3Q2019, it’s still better compared the losses it sustained in 1H2020. By region, ComfortDelGro saw operating profits in Singapore, China and Australia but a loss in the UK.
Similar to the other companies, ComfortDelGro has been encouraged by news of a vaccine. After ending 30 October at a trading price of $1.35, the company is now trading at $1.66 as of 24 December. This is still significantly lower than its trading price of $2.37 at the start of the year. Investors would hope that 2021 will see local transport resuming to regular service when the pandemic is curbed.
Thai Beverage (SGX: Y92)
Thai Beverage (SGX: Y92), or ThaiBev, is one of the largest beverage companies in Southeast Asia, and the largest in Thailand. It mainly sells spirits, beer, non-alcoholic beverages, and food.
As a significant part of ThaiBev’s business relies on the consumption of alcohol, it comes as no surprise that the company’s share price took a rough tumble earlier this year when many countries and cities in Southeast Asia including Singapore went into lockdown.
According to ThaiBev, its spirits segment remained resilient, driven by off-premise consumption, while beers, which relied more on on-premise consumption, were impacted by the temporary closure of entertainment venues and restaurants. Revenue fell 5.2% on a year-on-year basis.
Singapore’s market is mainly concentrated among the banks, real estate plays, and the GLCs (Temasek linked entities). Sure there are some small cap plays, but those have low liquidity and very high volatility (possibly manipulation as well?) so do know what you’re doing if you venture there.
Green Zone stocks for me in Singapore are:
- UOB, DBS, OCBC
- Real Estate
- CapitaLand, REITs (CICT, MCT etc)
- ST Engineering (but has rallied quite a lot).
The banks have rallied a lot the past 2 months, so I would probably stay away short term. I already have big positions there from this year, so there’s no immediate rush for me to add.
I love real estate. I think high quality real estate is going to do very well in the coming years because of low interest rates and fiat devaluation. Short term rentals will be tricky though, especially when all those office leases come due in 2021. But hey – the more they drop, the more I’m going to add.
Industrials wise, a lot of the GLCs are less competitive these days. The Singtel, Keppel, Sembcorp, they’re okay investments, but not necessarily amazing buys. The only one I really like in this space is ST Engineering, but it’s rallied a lot since the March lows.
Best industries to buy in 2021?
Which brings us to the best stocks to buy in 2021.
Green zone are the stocks that are doing not so good now, but should do well post COVID:
- Consumer discretionary
- Real Estate
Yellow zone are the stocks that are doing well now, but should continue to do okay post COVID:
- New Energy
we see the most opportunity in the Green and Yellow Zone, and it is where I will focus most of my investing in 2021. I spent much of 2020 buying up the Green zone stocks because they were selling at dirt cheap valuations.
After the reflation trade the past 2 months, the whole green zone has become a lot more expensive. So for now, I’m focussing more on the yellow zone, which has been neglected slightly in this reflation euphoria. But really, market sentiment is very fickle, and changes on a dime.
So we would stay nimble in 2021, and alternate between Green and Yellow Zone stocks based on the market mood. Whatever is out of favour at the moment, is what I would accumulate. BTW – we share commentary on the COVID crisis every weekend, so please sign up for our mailing list, its absolutely free.