When it comes to choosing which stock to buy, your decision should be based on the strength of the business behind the stock.
September is a good month to take a closer look at stocks.
That’s because most companies have just reported their latest quarterly or half-yearly earnings.
This gives you a perfect opportunity to sift through the list to see which business makes a good addition.
And with the economy set to recover, albeit slowly, prospects are starting to look up as well.
If I had S$10,000 worth of savings to deploy, here are four companies I would consider.
Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust, or MIT, is an industrial REIT that owns a portfolio of 114 properties spread out across six property segments such as data centres, business parks and light industrial buildings.
Assets under management as of 30 June 2021 stood at S$6.7 billion and the properties are spread out across Singapore and the US.
The REIT has a strong sponsor in Mapletree Investments Pte Ltd, a unit of Temasek Holdings, that owns and manages properties worth S$66.3 billion as of 31 March 2021.
Not only is MIT anchored by a strong sponsor, but its latest fiscal 2022 first quarter (1Q2022) results also showed impressive growth.
Gross revenue surged by 29.2% year on year to S$128.1 million, boosted by the acquisition of 14 data centres in the US and the absence of rental reliefs.
Distribution per unit (DPU) jumped by 16.7% year on year to S$0.0335.
The forward dividend yield for the REIT based on annualised DPU of S$0.134 stands at 4.7%.
SATS Ltd (SGX: S58)
SATS is a leading provider of food solutions and gateway services for a variety of airlines.
The group is present in over 55 locations in 14 countries and also has a food catering arm that supplies meals to food outlets using central kitchens.
Though the group has been badly impacted by the pandemic and resultant border closures, it managed to report a respectable set of earnings for 1Q2022.
Revenue surged by 31.6% year on year as travel demand has picked up since the nadir experienced in the same period last year, while food solutions also helped to pick up some of the slack.
SATS generated an operating profit of S$3.5 million and reported a net profit of S$6.4 million, reversing the loss of S$43.7 million incurred a year ago.
Flight handled more than doubled to 13,900 from the low base last year, while the number of meals served jumped by 37.1% year on year to 12.9 million.
Cargo was a bright spot as higher demand for freight services led to cargo tonne-kilometres increasing by 9.4% compared to May 2019 (i.e. pre-crisis levels).
Cargo tonnage soared by 75.4% year on year to 387,000 tonnes.
SATS is adapting to the tough conditions by building new capabilities to support its future growth, such as the acquisition of Food City in Thailand and Monty’s Bakehouse in the UK to increase its food production capacity.
Singapore Exchange Limited (SGX: S68)
Singapore Exchange Limited, or SGX, is the sole stock exchange operator in Singapore.
The group runs a platform for the buying and selling of a wide variety of securities such as equities, bonds and derivatives.
For its fiscal year 2021 ended 30 June 2021, SGX reported flat year on year revenue of S$1.05 billion.
Net profit slid by 6% year on year to S$445 million, principally due to higher expenses incurred on two acquisitions that the bourse operator made during the fiscal year.
Despite the weaker results, SGX maintained its quarterly dividend of S$0.08 per share. Its shares offer a trailing 12-month dividend yield of around 3.2%.
The group is pushing on with its strategic initiatives to grow the business.
Just last week, it introduced a listing framework for Special Purpose Acquisition Companies, or SPACs, to boost the equities market and attract more IPO aspirants.
Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong Group Ltd is a leading supermarket chain that owns a total of 63 outlets as of 30 June 2021.
The group sells an assortment of merchandise and live produce and offers more than 1,200 products under its 18 house brands.
The group saw a big surge in demand last year due to the onset of the pandemic, resulting in a higher base for comparison last year.
For its fiscal 2021 half year, revenue dipped by 8.8% year on year to S$681.7 million while net profit declined by 12.1% year on year to S$66.1 million.
An interim dividend of S$0.031 was declared.
Despite the dip, demand for Sheng Siong’s products should remain robust as more people are telecommuting and studying from home.
The group recently announced that it had purchased a property at New World Centre for S$17.25 million to reduce its rental expenses.
It will also seek to grow through the expansion of its network of outlets in Singapore, and will also be opening two new outlets in Kunming, China.
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Disclaimer: Royston Yang owns shares of SATS Ltd and Singapore Exchange Limited.
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