Budget 2020: These Companies And Industries Will Likely Benefit

All eyes were on this year’s Budget 2020.

The reason? The economic turmoil caused by the Covid-19 virus.

Thankfully, Budget 2020 did not disappoint.

The Government announced a “Stabilisation and Support Package” worth S$4 billion to help Singapore’s economy and to tide workers and businesses over this tough patch.

Targeted help for five industries

For Budget 2020, the Government has provided general help for workers and businesses in the form of a Job Support Scheme that will offset 8% of every employed local worker’s wages for three months (subject to a cap of S$3,600 per month).

A second scheme co-funds wage increases for Singaporean employees with the eligibility ceiling raised from S$4,000 to S$5,000.

These two measures are broad-based and will benefit all businesses operating in Singapore.

In addition, five industries most impacted by Covid-19 — tourism, aviation, retail, food services, and transport — will receive additional help.

As a first step, the funding period for the Jobs Support Scheme for these sectors will be extended from three to six months to allow employers to retail and reskill workers.

For the tourism sector, a property tax rebate of 30% will be granted for the Year 2020 for the accommodation component of licensed hotels and serviced apartments, as well as for MICE (Meetings, Incentives, Conventions and Exhibitions) venues.

At the same time, international cruise and regional ferry terminals receive a 15% rebate, while the two integrated resorts will receive a 10% rebate.

Meanwhile, a temporary bridging loan program will also be set up to help tourism businesses tide over cash flow crunches. The loan limit will be S$1 million with an interest rate capped at 5%.

For the aviation sector, there will be rebates for aircraft landing and parking charges, while for retail and food services, stallholders in National Environmental Agency (NEA) managed hawker centres and markets will receive rental waivers.

Finally, a 15% property tax rebate will also be granted for qualifying commercial properties.

Companies that benefit

Here’s a list of companies (along with explanations) that will benefit from Budget 2020.

This list is by no means exhaustive — but should be comprehensive enough to cover most of the industries impacted above.

A direct beneficiary of aviation-related measures is Singapore Airlines Limited (SGX: C6L). The company operates flights between Singapore and China, and the travel curbs had hit the airline hard due to falling passenger volumes.

The Budget provides for a 100% landing charge rebate for such flights, while Changi Airport Group (CAG) and the Civil Aviation Authority of Singapore (CAAS) will unveil more measures for airlines in due course.

While this may not make up the bulk of Singapore Airlines’ expenses, it does provide some relief from mounting costs.

Another beneficiary is SATS Ltd (SGX: S58), which is a major food caterer and ground handler for a host of airlines. SATS operates the Marina Bay Cruise Terminal through a joint venture, and the Maritime and Port Authority will be giving 50% port dues concession to cruise ships and regional ferries with a port stay of not more than five days.

This concession will help to reduce some of the operating costs for SATS as it was impacted by more cruise operators bypassing Singapore as a destination.

For the property tax rebates relating to hotels and MICE (meetings, incentives, conferences, and exhibitions) locations, REITs such as Suntec REIT (SGX: T82U), which holds a 60.8% interest in the Suntec Singapore Convention & Exhibition Centre, will stand to benefit by paying fewer taxes.

Integrated Resort (IR) owner Genting Singapore Ltd (SGX: G13) will also benefit as it owns hotels and MICE facilities, and the 10% property tax rebate for the IR will further reduce Genting’s tax payable.

Hotel owners such as City Development Limited (SGX: C09) (owns Orchard Hotel Singapore through Millennium and Copthorne), Hotel Royal Limited (SGX: H12) (owns 2 hotels in Singapore) and Hotel Properties Limited (SGX: H15) (owns 3 hotels in Singapore) will all benefit from the property tax rebate, and this will help to offset some of their expenses during this challenging time.

The 15% property tax rebate for qualifying commercial property in the food services and retail sectors could benefit Kimly Ltd (SGX: 1D0) and Sheng Siong Holdings Limited (SGX: OV8). The former owns coffee shops throughout Singapore while the latter owns properties from which it uses to operate its retail outlets.

Finally, tourism operator Straco Corporation Limited (SGX: S85) should see some relief from the bridging loan program as all three of its assets have been temporarily shut down. The loan program could provide much-needed working capital for the company as it seeks to navigate through this crisis.

ComfortDelgro Corporation Ltd (SGX: C52) will benefit from the earlier-announced Government handout of S$20 per vehicle per day for three months and will go a long way to defray costs for the transport giant.

ComfortDelGro, of course, is the largest taxi operator in Singapore with a market share of over 60%.

Off-Budget measures possible

While the above sounds promising for the companies and industries involved, things may always get much worse before they get better.

The Government has made this clear — the economy may suffer and a recession may hit our shores this year.

If need be, off-budget measures will be implemented for the worst-hit industries and the Government has promised to stand by to inject more help into ailing sectors if need be.

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Disclaimer: Royston Yang owns shares in SATS Ltd, Suntec REIT and Straco Corporation Ltd.

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