With 2019 coming to a close in just a few weeks, investors might be looking to draw inspiration from various sources to position their portfolios for the new year and beyond.
Here, I discuss 36 Singapore-listed shares in all (first 20 published in October, next 10 in November, and the final six in December) that investors can research further to see if it makes sense to buy for the long-term. These companies have something going on for them. They have a strong business, pay great dividends, have a compelling valuation, and/or strong future prospects, among other things. Stocks listed are in alphabetical order.
Disclaimer: The information that follows serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock. The writer may have a vested interest in some of the companies mentioned.
TL;DR: Those 36 Singapore-Listed Shares To Consider For 2020
(Initial 20 stocks published on 30 October 2019)
5. DBS Group
6. First REIT
12. Keppel DC REIT
(Updated on 13 November 2019)
25. Koufu Group Ltd
(Updated on 11 December 2019)
31. AEM Holdings Ltd
36. VICOM Limited
1. CapitaLand Limited (SGX: C31)
CapitaLand is the largest real estate company in the Straits Times Index and is also one of the biggest in Asia. Furthermore, CapitaLand is the sponsor of several real estate investment trusts (REITs) listed in Singapore.
Over the longer term, CapitaLand has the potential to grow after the acquisition of Ascendas-Singbridge. The merger, which was completed mid-2019, brings the combined assets under management (AUM) of the group to over S$123 billion, making it one of the world’s largest real estate investment manager by AUM.
The merger has many benefits, including giving the group higher visibility, better scale, and entry into new geographies. The higher AUM will also provide CapitaLand with the financial clout to broker more significant deals to further its AUM-growth in the coming years.
At CapitaLand’s share price of S$3.61, it has a price-to-book (PB) ratio of around 0.7 and a dividend yield of 3.3%.
2. CapitaLand Mall Trust (SGX: C38U)
CapitaLand Mall Trust is one of the REITs that is sponsored by CapitaLand. The retail REIT owns a total of 15 malls in its portfolio, including Bugis Junction, Junction 8, and Plaza Singapura. The REIT just announced its financial results for the third quarter ended 30 September 2019.
For the quarter, gross revenue grew 17.9% while net property income climbed 17.6%, as compared to a year back. With that, distribution per unit (DPU) rose 4.8% to 3.06 Singapore cents, up from 2.92 Singapore cents last year. CapitaLand Mall Trust saw the first full contribution from Funan after it opened its doors on 28 June 2019. This, together with a 100% contribution from Westgate, led to the better showing. The REIT acquired the balance 70% of Westgate in November 2018.
There’s potential for DPU to rise further in the coming year due to the full contributions from Funan and Westgate that were not available one year ago.
At CapitaLand Mall Trust’s unit price of S$2.56, it has a PB ratio of 1.2 and a distribution yield of 4.6%.
3. Challenger Technologies Limited (SGX: 573)
Challenger Technologies operates the Challenger chain of information technology (IT) retail stores, and online IT marketplace, Hachi.tech. Currently, the company has a total of 40 stores all over Singapore.
Challenger was in the news in June 2019 after minority shareholders blocked its voluntary delisting at a share price of S$0.56. The exit offer lapsed thereafter.
Minority shareholders felt the exit offer was too low. With loads of cash on its balance sheet, investors said it should be valued by cash flow to shareholders. Pangolin Investment Management, a minority shareholder, reckoned the fair value of the shares to be way above the offer price (of at least S$1.15) based on its free cash flow produced each year and excess cash in its coffers.
As of 30 June 2019, Challenger had S$66.1 million in cash and cash equivalents with zero debt. Free cash flow for its 2019 second-quarter surged 61% to around S$10 million.
In its latest earnings release, Challenger said that “retail trade continues to remain challenging in 2019”. If the retail market recovers in the coming year, there is potential for Challenger to do better and for it to be valued higher. The offeror will not be able to make another offer for Challenger shares in the next 12 months.
At Challenger’s share price of S$0.535, it has a price-to-earnings (PE) ratio of around 10 and a dividend yield of 5.8% based on the 2018 total dividend.
4. ComfortDelGro Corporation Ltd (SGX: C52)
ComfortDelGro is one of the largest land transport companies in the world, with operations in seven countries, including Singapore. It also has majority control over public transport provider, SBS Transit Ltd (SGX: S61), and vehicular and non-vehicular inspection company, VICOM Limited (SGX: V01).
ComfortDelGro has been a great dividend-paying company for the past decade.
From 2008 to 2018, the company has grown its dividend per share from 5.0 Singapore cents to 10.5 Singapore cents, translating to an annualised increase of 7.7%. During those years, ComfortDelGro’s dividends were also well-protected, with the dividend payment not going above the earnings in any of the years.
In the latest 2019 second-quarter, interim dividend grew 3% to 4.50 Singapore cents per share, and the dividend payout ratio was 67%, which shows the dividend was well-covered.
Even though ComfortDelGro’s taxi business is facing intense competition from the likes of Grab and Gojek, the group should be able to survive the challenging times due to its strong balance sheet. As of 30 June 2019, ComfortDelGro had a gross gearing of only 21%. SBS Transit and VICOM are also producing stable free cash flow, and that would flow back into ComfortDelGro.
At ComfortDelGro’s share price of S$2.38, it has a PE ratio of around 17 and a dividend yield of 4.5%.
5. DBS Group Holdings Ltd (SGX: D05)
DBS is Singapore’s largest bank with its reach spreading out to many growing Asian nations, including China and India.
In 2019, DBS became the first bank in the world to hold three global best bank awards at the same time. It clinched the “World’s Best Bank” accolade given by Euromoney this year. This comes after DBS won the “Global Bank of the Year” award from The Banker and “Best Bank in the World” award from Global Finance in 2018.
With an established and growing presence in Greater China, South Asia, and Southeast Asia, DBS is poised to capture growth in this part of the world in many years to come.
At DBS’ share price of S$25.37, it has a PB ratio of 1.3 and a dividend yield of 4.7%.
6. First Real Estate Investment Trust (SGX: AW9U)
First REIT is Singapore’s first healthcare REIT which owns 20 properties — primarily hospitals and nursing homes — in Indonesia, Singapore, and South Korea. The REIT’s assets, being healthcare in nature, are very resilient. The services provided by First REIT’s tenants are essential for the public, even during an economic downturn.
Late last year, the REIT’s units fell drastically due to fears of default from its Indonesian sponsor, Lippo Karawaci, when it suffered a credit downgrade. However, in March 2019, Lippo received a lifeline through a rights issue and the divestment of some of its assets. With the default overhang removed, investors can look at greener pastures.
Growth for the REIT in future years could come from the acquisition of assets from both Lippo and another of its sponsor, OUE Lippo Healthcare Ltd (SGX: 5WA).
At First REIT’s unit price of S$1.02, it has a PB ratio of 0.9 and a distribution yield of 8.4%.
7. Frasers Commercial Trust (SGX: ND8U)
Frasers Commercial Trust is a commercial REIT with six properties in Singapore, Australia and the UK. In our city-state, it owns Alexandra Technopark and China Square Central.
For its full-year ended 30 September 2019, despite a fall in gross revenue, DPU was stable at 9.60 Singapore cents. The lower revenue was on the back of lower occupancy for Alexandra Technopark, divestment of 55 Market Street, and the effects of the average weaker Australia dollar against the Singapore dollar.
The lower occupancy at Alexandra Technopark could be a thing of the past with Google Asia Pacific Pte Ltd moving into the space. The company will take up around 33% of the technopark’s total net lettable area for five years commencing in the first quarter of 2020. The fact that Google has chosen Alexandra Technopark could attract other businesses and help to further boost the occupancy rate at the property. As of 30 September 2019, Frasers Commercial Trust’s average committed occupancy was at 95%.
The REIT’s gearing ratio was low at 28.6.1%, at end-September 2019, giving it the financial flexibility to make yield-accretive investments and grow further.
At Frasers Commercial Trust’s unit price of S$1.64, it has a PB ratio of 1.0 and a distribution yield of 5.8%.
8. Haw Par Corporation Ltd (SGX: H02)
Haw Par owns the well-known Tiger Balm brand, a pain reliever which can be found in over 100 countries. The group also has strategic stakes in two other Singapore-listed blue-chip companies – United Overseas Bank Ltd (SGX: U11) and UOL Group Limited (SGX: U14).
Haw Par’s healthcare segment, which houses the Tiger Balm business, has grown strongly over the years. Its segment profit has climbed 437% in all from 2007 to 2018. Looking ahead, there’s plenty of opportunities for Haw Par to grow further by introducing more new products into existing markets and the likes.
At Haw Par’s share price of S$13.31, it has a PE ratio of 15 and a dividend yield of 2.3%.
9. Hongkong Land Holdings Limited (SGX: H78)
Hongkong Land is a property investment, management, and development group with assets in countries such as Hong Kong, Singapore, and China.
At around the midway point in 2019, Hongkong Land’s shares were beaten down due to the anti-extradition protests in Hong Kong. The five-month-long protests have brought the territory into recession, as reported by the press this week. However, over the long-term, Hong Kong should continue attracting businesses from all over as a financial hub of Asia.
At Hongkong Land’s share price of US$5.32, it has a PB ratio of 0.3 and a dividend yield of 4.1%.
10. HRnetGroup Ltd (SGX: CHZ)
HRnetGroup is the biggest recruitment firm in the Asia-Pacific region, excluding Japan. The company has been facing headwinds of late due to the slowing economy in Singapore and the region.
In its 2019 second-quarter, HRnetGroup’s gross profit went down by 4.3% year-on-year. The company said that the poor showing was mainly on the back of lower gross profit from Singapore, which tumbled 10%.
When the economy falters, companies cut costs, including lowering their staff count and freezing new hires. HRnetGroup, being in the recruitment business, is likely to get hit as a result. Over time, however, economies recover, and things start looking rosy again. When that happens, HRnetGroup could see higher usage of its services, leading to better financial performance.
HRnetGroup’s strong balance sheet would allow it to ride through the storm. As of 30 June 2019, it had cash and cash equivalents of S$274.4 million with zero bank borrowings.
At HRnetGroup’s share price of S$0.585, it has a PE ratio of 12 and a dividend yield of 4.8%.
11. iFAST Corporation Ltd (SGX: AIY)
iFAST an Internet-based investment products distribution platform that provides a comprehensive range of investment products and services to both corporate clients and retail investors. The company has two main business divisions, namely, Business-to-Consumer (B2C) and Business-to-Business (B2B).
iFAST’s economic moat comes from its network effect. As the company signs up more suppliers (such as fund houses, banks, and insurance companies), more B2B customers (such as financial institutions) will see value in the platform, as there are more products to sell to their own clients. With more sales, the suppliers would then be keen to add more products, creating a flywheel. A similar phenomenon applies to iFAST’s B2C business too.
The company is well-positioned to tap into the growth opportunities in Asia’s wealth management segment over the long-term. Its China business is currently loss-making, but the company sees huge potential in the country. Overall, iFAST has a target of reaching assets under administration (AUA) of S$100 billion by the end of 2028. Its current AUA is around S$9 billion, as of 30 June 2019.
At iFAST’s share price of S$1.00, it has a PE ratio of 29 and a dividend yield of 3.2%.
12. Keppel DC REIT (SGX: AJBU)
Keppel DC REIT is the first pure-play data centre REIT in Asia. Its portfolio has 15 high-quality data centres located in key data centre hubs such as Singapore, Australia and the United Kingdom.
Data is said to be the new oil, and the explosion of data usage will benefit Keppel DC REIT over the long-term. Seagate predicts that worldwide data creation will grow to an enormous 163 zettabytes by 2025, which is ten times the amount of data produced in 2017.
At Keppel DC REIT’s unit price of S$1.96, it has a PB ratio of 1.8 and a distribution yield of 3.9%.
13. Mapletree Commercial Trust (SGX: N2IU)
Mapletree Commercial Trust owns office and retail assets such as VivoCity, Mapletree Business City I, and PSA Building.
In its latest quarter, the REIT’s gross revenue and distribution per unit (DPU) climbed 1.9% and 2.2%, respectively, year-on-year. In the coming years, the REIT could see higher revenue and DPU with the acquisition of Mapletree Business City (Phase 2) and spillover effects from the expansion of Resorts World Sentosa (RWS) to VivoCity, the largest contributor to the REIT in terms of gross revenue.
The RWS expansion will begin in phases with new experiences opening every year from 2020 to a projected completion around 2025.
The Singapore government’s Greater Southern Waterfront project could also make Mapletree Commercial Trust, with its assets scattered around that location, a more attractive REIT overall.
At Mapletree Commercial Trust’s unit price of S$2.35, it has a PB ratio of 1.4 and a distribution yield of 3.9%.
14. Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics is involved in designing, manufacturing, and marketing of consumables and precision tools that are used in the semiconductor industry.
Micro-Mechanics’s revenue for its full year ended 30 August 2019 (FY2019) tumbled 7.3% to S$60.3 million, while net profit declined by 24.5% to S$12.9 million. The poor showing was mainly due to a slowdown in the global semiconductor industry.
However, the slowdown is likely to be short-term in nature. Over the long run, demand for Micro-Mechanics’ products should be aplenty given the ever-increasing use of chips in our everyday lives.
In fact, its business seems to have bottomed out in the first quarter of FY2020. In the latest quarterly results that were reported at the end of last month, revenue and net profit saw their first quarter-on-quarter increases since the first quarter of FY2019.
At Micro-Mechanics’ share price of S$1.85, it has a PE ratio of around 20 and a dividend yield of 5.4%.
15. NetLink NBN Trust (SGX: CJLU)
NetLink NBN Trust is involved in designing, building, owning and operating the passive fibre network infrastructure. The extensive network gives nationwide coverage to residential homes and non-residential locations in mainland Singapore and the adjoining islands.
NetLink NBN Trust is seen to have a resilient business model with predictable cash flows. Since the trust is the sole nationwide provider of residential fibre network in Singapore, it is hard for a new competitor to come in and knock NetLink NBN Trust off its perch. For its 2019 fiscal year, the business trust’s DPU was 4.88 Singapore cents, and this exceeded the initial public offering (IPO) DPU projection by 5.2%.
Going forward, the trust has many growth drivers, such as providing services to power Singapore’s continued push to be a Smart Nation and wiring up new households that require fibre connections.
At NetLink NBN Trust’s unit price of S$0.91, it has a PB ratio of 1.2 and a distribution yield of 5.4%.
16. Raffles Medical Group Ltd (SGX: BSL)
Raffles Medical is a large private healthcare group founded in Singapore.
For the company’s 2019 third-quarter results, revenue grew around 8% year-on-year, but net profit after tax tumbled some 16%. The fall in the bottom-line was mainly due to start-up losses at Raffles Hospital Chongqing.
In 2019, the group opened a new hospital in Chongqing, China, and is slated to open another one in Shanghai next year. Start-up losses are expected for the new hospitals before the businesses ramp up. However, over the long run, the hospitals have the potential to do well, considering the total addressable market in those two cities are many times larger than that of Singapore.
At Raffles Medical’s share price of S$1.00, it has a PE ratio of 28 and a dividend yield of 2.5%.
17. Riverstone Holdings Limited (SGX: AP4)
Riverstone is a manufacturer of nitrile and natural rubber cleanroom gloves used in the electronics sector, as well as premium nitrile gloves used in the healthcare sector.
There is a strong demand for its gloves as seen from its revenue growth over the years; revenue grew at an enviable rate of 23% per annum from 2014 to 2018. Over the same period, net profit climbed 16% each year.
To keep up with demand, Riverstone plans to increase production capacity by 1 to 1.5 billion pieces of gloves each year. It also expects both cleanroom and healthcare markets to grow and continue to gain traction. With gloves being a consumable product, clients will keep coming back to Riverstone for more.
At Riverstone’s share price of S$0.975, it has a PE ratio of 17 and a dividend yield of 2.4%.
18. SATS Ltd (SGX: S58)
SATS is a provider of food solutions and gateway services solutions, mostly to the aviation industry.
Being a major services provider at Changi Airport, the expansion of Singapore’s airport will help to grow the company further.
Changi Airport is expected to open Terminal 5 around 2030, and the terminal will be larger than Terminals 1, 2 and 3 combined.
The rising middle class in Asia should also provide tailwinds for SATS’ overall business. Furthermore, SATS is pumping more money, in the tune of S$1 billion, into investments over the next three years to take advantage of the growth opportunities found in the region.
At SATS’ share price of S$4.96, it has a PE ratio of 23 and a dividend yield of 3.8%.
19. Singapore Exchange Limited (SGX: S68)
Singapore Exchange (SGX) is a multi-asset exchange that provides services such as equities, derivatives, and fixed income trading.
For SGX’s 2019 fiscal year, it reported that revenue hit the highest level since listing and that net profit hit an 11-year peak.
The great showing continued into its 2020 fiscal year with revenue and net profit climbing 19% and 25%, year-on-year, respectively. All of SGX’s three business segments — Fixed Income, Currencies and Commodities; Equities; and Data, Connectivity and Indices — posted higher revenue. There’s potential for SGX to grow in the years ahead, both organically and inorganically (through acquisitions).
At Singapore Exchange’s share price of S$9.06, it has a PE ratio of 23 and a dividend yield of 3.3%.
20. Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6)
Yangzijiang is a leading shipbuilder in China in terms of manufacturing capability and capacity.
Yangzijiang’s shares tumbled over 30% in August on negative news surrounding Chairman Ren Yuanlin’s charitable foundation. Ren had been on a leave of absence since 9 August to assist in a confidential investigation carried out by the Chinese government authorities. In an announcement, Yangzijiang said that none of its directors, including Ren, were the subject of the investigation. Despite the reassurance by the company, Yangzijiang’s share price has yet to fully recover.
At Yangzijiang’s share price of S$0.995, it has a PE ratio of 5 and a dividend yield of 5.0%.
(Updated on 13 November 2019)
21. Boustead Singapore Limited (SGX: F9D)
Boustead Singapore is a global service provider of infrastructure-related engineering services and geo-spatial technology solutions. It added a healthcare business to its suite of services just last year.
Boustead Singapore’s share price has fallen drastically in the past couple of years. The slowdown in the global oil and gas industry and Singapore’s industrial real estate sector are the main culprits for the poor performance of Boustead Singapore’s business. With the declining business in the short-term, Boustead Singapore’s share price also took a beating.
However, for the long-term, the company has the potential to do well.
For one, Boustead Singapore’s order book is improving. As of the first quarter of FY2020 (fiscal year ending 31 March 2020), the company’s order book grew to a record high of S$725 million, more than doubling from S$304 million seen a year ago. The substantial increase was mainly due to sizeable order wins by the real estate solutions division.
Boustead Singapore’s balance sheet is also flushed with cash. As of 30 June 2019, the company had S$140.1 million in net cash (cash and cash equivalents minus total borrowings). The record order book and robust balance sheet should bode well for the company in the long run.
At Boustead Singapore’s share price of S$0.78, it has a PE ratio of 14 and a dividend yield of 3.8%.
22. Dairy Farm International Holdings Ltd (SGX: D01)
Dairy Farm is a pan-Asian retail group with operations across many Asian countries and territories. It manages supermarkets, hypermarkets, convenience stores, health and beauty stores, and home furnishings stores under well-known brands such as Cold Storage, 7-Eleven, Guardian, and IKEA. Such stores are perceived as being recession-proof as people still need to purchase groceries, personal care products, and household items no matter what the economy does.
Just like Boustead Singapore, Dairy Farm’s shares have not been performing well of late. One of the main factors that contributed to the poor performance was lower profitability in 2018 due to business restructuring.
For the year, Dairy Farm exited various underperforming stores from its food division in South-east Asia, among others, causing the company to clock a one-off expense of US$453 million.
Dairy Farm’s business transformation is set to take multiple years. However, the results are already coming in. In its 2019 first-half results announcement, the company said that underlying sales performance in the food division has begun to show signs of growth.
It would be interesting to watch if Dairy Farm is able to turn around its business fully in the coming year and beyond.
At Dairy Farm’s share price of US$6.10, it has a PE ratio of 131 (looks extremely high due to depressed earnings) and a dividend yield of 3.3%.
23. Frencken Group Limited (SGX: E28)
Frencken was highlighted by a member of our Seedly Personal Finance Facebook Community.
The company is a global integrated technology solutions outfit that is involved in providing high-tech capital and consumer equipment services.
From 2014 to 2018, Frencken’s revenue has grown from S$472.7 million to S$625.8 million, translating to an annualised growth rate of 7.3%. The increase in its net profit is even more impressive, surging 26% each year, from S$11.9 million in 2014 to S$30.0 million in 2018.
With the huge rise in profitability, Frencken’s dividend has grown from 1.0 Singapore cents per share in 2014 to 2.14 Singapore cents per share in 2018, up 20% on an annualised basis. The dividend is well-protected, with the dividend payout ratio (dividend per share divided by earnings per share) only at 30% in 2018.
In its latest 2019 third-quarter, revenue grew 3.8% year-on-year, but net profit more than doubled, from S$5.3 million to S$11.4 million, on the lack of impairment losses seen in the third quarter of 2018. As of 30 September 2019, Frencken had a strong balance sheet with S$79.8 million in cash hoard and S$31.4 million in total debt.
At Frencken’s share price of S$0.76, it has a PE ratio of around 8 and a dividend yield of 2.8%.
24. Genting Singapore Ltd (SGX: G13)
Genting Singapore became the first operator of an integrated resort in Singapore when Resorts World Sentosa (RWS) started operating in 2010. The destination resort offers a casino, a water park, an aquarium, the Universal Studios Singapore theme park, hotels, and many more.
In its third-quarter of 2019, Genting did not perform well; its revenue fell 7% while net profit tumbled 24%. Genting cited “a confluence of headwinds” as the reason for the poor financial performance. However, it said that it continues to be “positive in attracting the affluent market from the region and leverage on the growing Asian economies”.
Genting, early this year, announced plans to expand RWS for a cool sum of S$4.5 billion. The expansion will see the integrated resort add some 164,000 square metres of gross floor area of leisure and entertainment space. Construction work is expected to start in the second half of 2020. In its latest earnings release, Genting gave some colour on the expansion plan:
“Beginning with the Adventure Dining Playhouse which is scheduled to open late next year, visitors to RWS can look forward to an exciting line up of new attractions and business venues unveiled every year over the next 5 years. All these exciting openings which will occur every year until the final completion, will add to the desirability of the resort and customer appeal. It will also complement and anchor the recently announced Sentosa-Brani Master Plan that is envisioned to rejuvenate and drive future growth of Singapore’s tourism and economy.”
Genting has also put in place plans to expand beyond Singapore. Late last month, it was revealed that the company has been shortlisted as one of the three bidders for an integrated resort in Osaka, Japan.
At Genting Singapore’s share price of S$0.935, it has a PE ratio of 17 and a dividend yield of 3.7%.
25. Koufu Group Ltd (SGX: VL6)
Koufu is yet another company that was highlighted by a member of our Seedly Personal Finance Facebook Community. The company, which was started in 2002, is one of the largest operators and managers of food courts and coffee shops in Singapore. Koufu went public last year.
Koufu’s choice of location for its food courts seems deliberate. It has food halls at institutes of higher education and also one in Sengkang General and Community Hospital, Koufu’s first in a hospital. This is on top of its presence in various shopping malls. There’s a Koufu food court at a shopping centre near my workplace and from what I’ve seen so far, it’s always full during lunchtime.
Koufu’s business is resilient and it is also highly cash-generative. For its 2019 third-quarter, net cash from operations ballooned 220% year-on-year to S$79.9 million. As of 30 September 2019, its balance sheet had S$88.6 million in net cash.
Koufu is looking to expand its central procurement, preparation, processing, and distribution functions by moving into a larger central kitchen and corporate headquarters. Construction for Koufu’s integrated facility at Woodlands Avenue 12 started in the final quarter of this year and it is expected to be completed by the first half of 2020. The building will be over five times larger than its existing central kitchens and headquarters.
At Koufu’s share price of S$0.75, it has a PE ratio of 15 and a dividend yield of 3.4%.
26. Mapletree Industrial Trust (SGX: ME8U)
Mapletree Industrial Trust is an industrial REIT that owns 87 industrial properties in Singapore and 14 data centres in the United States (40% interest through a joint venture with its sponsor, Mapletree Investments Pte Ltd).
For the REIT’s quarter ended 30 September 2019, gross revenue and net property income climbed 10.5% and 13.3%, respectively. The improved performance was mainly due to new revenue contributions from 18 Tai Seng, 30A Kallang Place, and Mapletree Sunview 1.
Mapletree Industrial Trust’s DPU consequently grew 4% to 3.13 Singapore cents. There’s potential for DPU to grow further as the REIT announced the acquisition of 13 more data centres in North America, which is expected to fully complete in early-2020.
As for the growth potential in the US data centre space, the REIT mentioned:
“According to 451 Research, the United States remained the world’s largest and most established data centre market, which accounted for about 32% of the global insourced and outsourced data centre space (by net operational sq ft). The United States leased data centre supply (by net operational sq ft) and demand (by net utilised sq ft) are expected to grow at a compound annual growth rate of 4.6% and 6.5% respectively.”
Mapletree Industrial Trust complements Keppel DC REIT (featured earlier) in the global data centre front.
At Mapletree Industrial Trust’s unit price of S$2.49, it has a PB ratio of 1.6 and a distribution yield of 5.0%.
27. Mapletree Logistics Trust (SGX: M44U)
Mapletree Logistics Trust is also sponsored by Mapletree Investments, along with Mapletree Commercial Trust. Mapletree Logistics Trust is an Asia-focused logistics REIT with a portfolio of 137 logistics assets in Singapore, Hong Kong, Japan, China, Australia, South Korea, Malaysia and Vietnam.
Gross revenue and net property income grew 14.2% and 21.0%, year-on-year, respectively, for its financial quarter ended 30 September 2019. The improvement came on the back of stable performance across all its markets. With that, DPU climbed 3.4% to 2.025 Singapore cents.
Portfolio occupancy for the REIT has been resilient at 97.5%, as of end-September 2019, despite headwinds in the regional economies.
One major growth driver for Mapletree Logistics Trust is the rise in e-commerce. With the proliferation of online shopping, companies require warehousing space to store goods for delivery. As such, there will be ongoing demand for Mapletree Logistics Trust’s properties.
At Mapletree Logistics Trust’s unit price of S$1.62, it has a PB ratio of 1.3 and a distribution yield of 5.0%.
28. Parkway Life REIT (SGX: C2PU)
Parkway Life REIT is one of Asia’s largest listed healthcare REITs. It has 50 properties in total in Singapore, Japan, and Malaysia. In Singapore, Parkway Life REIT owns Mount Elizabeth Hospital, Gleneagles Hospital, and Parkway East Hospital.
The Singapore properties contribute to the majority of Parkway Life REIT’s gross revenue. The hospitals’ rentals include a built-in rental escalation, based on the consumer price index (CPI), a measure of inflation. This feature guarantees a 1% growth in minimum rental each year.
As for the Japan properties, most of the properties have an “up only” rental structure, meaning that rentals only have one way to go, which is up. The Malaysia portfolio contributes to a negligible amount of gross revenue.
The resilient rental structure makes Parkway Life REIT an attractive investment for investors to own. From 2014 to 2018, Parkway Life REIT’s DPU (excluding one-off divestment gains) has climbed steadily from 11.52 Singapore cents to 12.87 Singapore cents.
At Parkway Life REIT’s unit price of S$3.23, it has a PB ratio of 1.7 and a distribution yield of 4.1%.
29. Sheng Siong Group Ltd (SGX: OV8)
Sheng Siong is a Singapore-grown supermarket chain with close to 60 outlets in Singapore. Recently, the company expanded into China to capture growth in that market.
Just like Koufu, Sheng Siong’s business is a resilient one. People shop for groceries, no matter what the economy does. The resiliency can be seen from Sheng Siong’s past financial performance.
The supermarket chain’s revenue climbed consistently from S$726.0 million in 2014 to S$890.9 million in 2018, translating to an annualised growth of 5.3%.
Similarly, its net profit attributable to shareholders grew 10.3% annually, from S$47.6 million in 2014 to S$70.5 million in 2018. With the higher profitability, Sheng Siong’s net profit margin has grown from 6.6% to 7.9% over the same time frame.
For its 2019 third-quarter, Sheng Siong’s revenue grew 11.4% year-on-year while net profit improved by 16.4%. As of 30 September 2019, the supermarket chain had a rock-solid balance sheet with S$82.6 million in cash balance and no borrowings.
As for its outlook, Sheng Siong’s chief executive Lim Hock Chee said the following in the latest earnings release:
“Going ahead, we will continue with our efforts in expanding our retail network in Singapore, especially in areas where our potential customers reside. Besides placing focus on nurturing the growth of our new stores in Singapore and China, we remain committed to enhancing the gross margin and lowering input cost by improving the sales mix with a higher proportion of fresh produce and deriving more efficiency gains in the supply chain.”
At Sheng Siong’s share price of S$1.20, it has a PE ratio of 24 and a dividend yield of 2.9%.
30. Straco Corporation Ltd (SGX: S85)
Straco owns and operates tourism attractions in China and Singapore. In China, the company owns the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions. In Singapore, Straco has a majority stake in the iconic observation wheel, Singapore Flyer.
Straco’s 2019 second-quarter financial results weren’t great. Revenue fell 6.5% year-on-year due to lower ticket sales from its China attractions while net profit fell 16.8%.
However, over the longer term, things look better. Earnings grew 23.3% per annum, from S$3.4 million in 2006 to S$41.8 million in 2018 while free cash flow climbed 54% each year, from S$5.5 million in 2006 to S$47.2 million in 2018. Free cash flow is money that a company can use to pay out dividends to shareholders, buy back shares, make acquisitions, or strengthen its balance sheet, among other things.
Straco ended off June 2019 with S$188 million in cash balance and total debt of just S$31.9 million. The huge cash hoard, together with copious amounts of free cash flow it generates each year, provides Straco with ample ammo to grow by acquiring strong attractions around the world.
At Straco’s share price of S$0.73, it has a PE ratio of 14 and a dividend yield of 3.4%.
(Updated on 11 December 2019)
31. AEM Holdings Ltd (SGX: AWX)
AEM is involved in designing and manufacturing of equipment and precision components.
The company has a strategic relationship with one of the world’s largest semiconductor companies (believed to be Intel) for over 18 years. AEM has been developing and manufacturing leading-edge test handlers and consumables for its top client.
For the first nine months of 2019, AEM’s profit before tax exceeded 2018’s profit before tax, which was, in turn, was the best year in AEM’s history.
For the whole of 2019, AEM has a sales guidance of between S$285 million and S$305 million. In 2018, AEM clocked in a revenue of S$262.3 million.
The company’s balance sheet is also strong with no borrowings. That should help AEM tide through any tough economic conditions.
With the growth of fifth-generation (5G) cellular communication and artificial intelligence (AI), AEM could continue growing with the semiconductor industry.
At AEM’s share price of S$1.91, it has a PE ratio of 13 and a dividend yield of 2.0%.
32. CapitaLand Commercial Trust (SGX: C61U)
CapitaLand Commercial Trust is Singapore’s first and largest listed commercial REIT. As of 30 September 2019, the REIT’s portfolio was valued at around S$11.6 billion, and it currently has eight prime commercial properties in Singapore and two properties in Frankfurt, Germany.
There’s plenty of positive things going on for CapitaLand Commercial Trust that could provide a bump in DPU.
For instance, the REIT completed the acquisition of Main Airport Center in Frankfurt in September 2019. The property only contributed to income from 18 September to 30 September this year. So, there’s room for income to grow for CapitaLand Commercial Trust in 2020 due to the new acquisition. The committed occupancy for Main Airport Center was 93.1%, at end-September 2019, up from 90.0% as of 30 June 2019.
Further down the road, there’s a possibility of higher income contribution from Six Battery Road and 21 Collyer Quay after completion of asset enhancement initiatives in 2021. There’s also currently-under-development CapitaSpring, which is expected to contribute from 2022. CapitaLand Commercial Trust has a 45% interest in CapitaSpring.
At CapitaLand Commercial Trust’s unit price of S$2.00, it has a PB ratio of 1.1 and a distribution yield of 4.4%.
33. Frasers Centrepoint Trust (SGX: J69U)
Frasers Centrepoint Trust is a retail REIT with seven malls located all over Singapore, including Causeway Point, Northpoint City North Wing (including Yishun 10 retail podium), Changi City Point, and Waterway Point (40% interest).
For the retail REIT’s financial year ended 30 September 2019 (FY2019), on a year-on-year basis, gross revenue and net property income stepped up by 1.6% and 1.5% respectively.
Meanwhile, distributable income rose 6.6% S$118.7 million, largely due to maiden contributions from the REIT’s shareholding in PGIM Real Estate Asia Retail Fund (PGIM ARF) and Sapphire Star Trust, which holds Waterway Point.
PGIM ARF owns and manages six retail malls in our sunny island — Tiong Bahru Plaza, White Sands, Liang Court, Hougang Mall, Century Square and Tampines 1 — and office property, Central Plaza.
Consequently, FY2019 DPU inched up by 0.5% to 12.07 Singapore cents, a new record.
Looking ahead, the REIT’s manager said in the latest earnings release:
“Together with the opportunity to acquire suburban retail assets from its sponsor Frasers Property, FCT now has a very strong pipeline of assets in Singapore, setting the stage for an exciting phase of growth. For next few years, we will be focusing on improving the performance of the properties in our portfolio and those in our joint ventures and associates, as well as executing our strategies to drive FCT’s growth and to optimise returns to our unitholders. Our focus will continue to be in Singapore and in the suburban retail sector.”
At Frasers Centrepoint Trust’s unit price of S$2.74, it has a PB ratio of 1.2 and a distribution yield of 4.4%.
34. Frasers Logistics & Industrial Trust (SGX: BUOU)
Frasers Logistics & Industrial Trust is a REIT with 91 logistics and industrial properties located in Australia, Germany and the Netherlands.
For FY2019, the REIT’s revenue surged 23% year-on-year while its adjusted net property income improved by 26.1% mainly due to new acquisitions. DPU rose 4.8% in Australian dollar terms, but fell 2.6% in Singapore dollar terms to 7.00 Singapore cents.
With the proliferation of e-commerce, Frasers Logistics & Industrial Trust’s properties have the potential to continue doing well.
Also, the proposed merger between Frasers Logistics & Industrial Trust and Frasers Commercial Trust would bring plenty of benefits for Frasers Logistics & Industrial Trust.
At Frasers Logistics & Industrial Trust’s unit price of S$1.23, it has a PB ratio of 1.3 and a distribution yield of 5.7%.
35. Kingsmen Creatives Limited (SGX: 5MZ)
Kingsmen is an interior and exhibition design company that designs and fits out retail shops and creates permanent and temporary installations for theme parks, events and exhibitions.
Kingsmen’s business has not been performing well in recent history largely due to slow demand from the high-end luxury retail segment.
Due to the slow down, Kingsmen ventured into the affordable luxury, fast fashion, and food and beverage segments. That has also caused the company’s margins to fall since there’s more competition in those sectors.
However, things could turn around in 2020 and beyond.
The company has ventured into the intellectual property (IP) segment to be a creator of experiences.
Recently, Kingsmen opened Singapore’s first NERF attraction in collaboration with Hasbro and has plans to venture into other countries with the NERF IP. There are also other IPs secured by Kingsmen that could contribute to net profit going forward.
At Kingsmen’s share price of S$0.44, it has a PE ratio of 16 and a dividend yield of 5.7%.
36. VICOM Limited (SGX: V01)
VICOM is a provider of technical testing and inspection services largely in Singapore. The company has a 70% market share in the vehicle testing business in our country.
In recent history, net profit has also been falling due to low business volumes. However, there are signs of improvement at VICOM.
For the third quarter ended 30 September 2019, VICOM’s revenue climbed 4.7% year-on-year while net profit increased by 6.5%.
There’s data showing that more car owners are hanging on to their cars beyond the statutory 10-year mark. This means that the cars have to be inspected annually, instead of once every two years, which is the case for cars between three and 10 years old. With a higher volume of inspections, there’s potential for VICOM’s revenue to grow.
At VICOM’s share price of S$7.63, it has a PE ratio of 19 and a dividend yield of 6%.
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