4 Singapore Blue Chip Stocks Trading Near 52-Week Lows: Should You Buy?
We often hear of investors reacting with despair when their stocks hit a 52-week low.
But things may not always be as bad as they seem.
One popular method of finding bargains involves trawling through the 52-week low list.
Both sentiment and business fundamentals play a part in causing stocks to tumble to their year-low.
If weak sentiment is at play, then you could be looking at a valuable opportunity to accumulate shares in a quality company that has been unfairly beaten down.
That said, it’s important to observe the state of the business and review a few key financial metrics to determine if such stocks do, indeed, constitute a bargain.
Even blue-chip companies are not immune to such plunges.
Here are four that are trading close to their 52-week lows that you can potentially add to your watchlist.
ComfortDelGro Corporation Limited (SGX: C52)
ComfortDelGro, or CDG, is one of the world’s largest land transport companies with a fleet of around 40,000 buses, taxis and rental vehicles.
The group runs operations in seven countries — Singapore, Australia, China, the UK, Ireland, Vietnam, and Malaysia.
The transport giant’s shares recently hit a 52-week low of S$1.47, and are down around 12% year to date.
The decline coincided with CDG’s announcement that it will scrap its plans to list its Australian subsidiary as part of its broad-ranging strategic review.
That said, the taxi operator’s recent results have been decent, coming off last year’s low base.
The group reported an improved set of earnings for its fiscal 2021 third quarter (3Q2021), with revenue inching up 7.4% year on year to S$880.3 million.
Net profit increased by 19.4% year on year to S$25.8 million despite a sharp decline in COVID-19 government reliefs.
In Singapore, ridership for public transport has remained at around 60% of pre-pandemic levels.
Meanwhile, CDG is pressing on with other initiatives.
The transport operator recently announced that its wholly-owned private bus company had won a S$30 million contract to operate Singapore’s largest electrified private bus fleet at the National University of Singapore.
The group also acquired a property in Brentford, London, for around S$6.5 million to develop a new bus garage.
Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is a data centre REIT that owns a portfolio of 19 data centres across eight countries worth around S$3.1 billion.
Its units recently touched a 52-week low of S$2.32 and are down 15% year to date.
Despite the unit price decline, the REIT posted encouraging growth in its distribution per unit (DPU) for 3Q2021.
Gross revenue inched up 2.5% year on year to S$69.3 million while DPU increased by 4.5% year on year to S$0.02462.
Keppel DC REIT also announced two acquisitions recently — that of a data centre in the Netherlands and its maiden acquisition data centre in Guangdong, China.
In addition, the REIT manager has also agreed to subscribe for bonds and preference shares issued by M1, a subsidiary of Keppel Corporation Limited (SGX: BN4).
All these transactions are expected to boost its DPU over time.
Wilmar International Limited (SGX: F34)
Wilmar is a leading agribusiness group with an integrated business model that encompasses the entire value chain of the commodities business.
The group has over 500 manufacturing plants and an extensive distribution network covering China, India, Indonesia and 50 other countries.
Wilmar’s shares closed at S$4.22 recently, not far from its 52-week low of S$4.04.
The commodities giant recently reported an upbeat set of earnings for 3Q2021, with revenue surging by 28.7% year on year to US$17.1 billion.
Core net profit increased by 15% year on year to US$576.4 million.
The group had also declared an interim dividend of S$0.05 last quarter, its highest interim dividend since listing.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is Singapore’s sole stock exchange operator.
The bourse operator’s shares have declined nearly 24% from a year high of S$12.05 to S$9.18, and are trading just shy of its 52-week low of S$8.89.
The group reported a downbeat set of earnings for its fiscal year 2021 ended 30 June 2021 as expenses from acquisitions ate into its net profit.
In addition, weak sentiment has surrounded the Singapore bourse operator as its competitor, Hong Kong Exchanges and Clearing (SEHK: 0388), offered its first A-shares derivative contract that began trading in October.
SGX has pushed on with initiatives to grow its business, though.
The group may see its first special purpose acquisition company listed very soon, while the recent IPO of Daiwa House Logistics Trust (SGX: DHLU) may signal a return of large listings again.
SGX also announced a partnership with Changi Airports International to launch an index that captures long-term aviation and travel-related growth.
Get Smart: The importance of dividends
Low share prices are an enticing deal.
But as Smart Investors, we have to look past the short-term price movements and focus on the business.
Thankfully, all the companies, except for CDG, have continued to pay out uninterrupted dividends over the past 23 months..
That’s something we value here at The Smart Dividend Portfolio.
Dividend consistency is the first sign that the company has the financial means to sustain the dividends.
But that’s not the end of the analysis.
At The Smart Dividend Portfolio, we have dug in further, examining the sustainability of the business, its ability to generate enough cash, and the company’s willingness to share their spoils with investors like you and me.
In essence, we seek stocks that can pay us for life.
We document all our work in detailed case studies that we can refer to in the future to check our progress.
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Disclaimer: Royston Yang owns shares of Keppel DC REIT and Singapore Exchange Limited.
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