Singapore’s Best Blue-Chip Stocks of 2019
What are blue-chip stocks?
The term “blue-chips stocks” is coined from poker where the blue chips hold the highest value. Blue-chip stocks are thus the most valuable stocks traded in a market. These are the stocks that are usually the best performers in their particular markets with strong balance sheets and are often nationally recognized.
Most stock investors, especially in the Singapore stock market, prefer to invest their stock in blue-chip stocks. This is because there is the perceived notion that there is more certainty and less risk in such stocks. This is true to some extent because such companies get to that level as a result of hard work and proper management. They can also afford the financial muscle to keep them going in the future and are determined to continue generating investor value for as long as possible.
Blue-chip companies are worth looking into in the Singapore stock market. Such stocks should be appealing to investors, especially beginners because they are characterized by low risk in comparison to the stocks of other companies that are not as big. Regardless, investors need to exercise caution when venturing into the market because anything can happen.
Blue chip companies are generally on an upward trend in terms of the share price. This is for the reason that the economy is growing as a whole. According to Singapore’s Department of Statistics, the economy grew by 2.6% in the third quarter of 2018. Further, per-sector growth was significant in the same quarter.
Most important is the fact that the blue-chip companies will be at the forefront driving the growth. Therefore, it is prudent to say that the above-mentioned companies are not the only ones that will experience growth.
Below are some of Singapore’s best blue-chip stocks.
DBS (DBS Group Holdings Ltd)
DBS is Singapore’s largest bank in terms of assets. It is also an international bank with more than 250 branches in 18 Asian markets. It is also part of the Straits Times Index which consists of 30 major companies in Singapore. Some of the bank’s significant activities include banking, financing, mortgage financing, corporate advisory services, investment holdings, stock broking, merchant banking, and trustee services among many others. The bank also has a history of buying back its shares as well as generating value.
Venture Corporation Ltd
What makes Venture Corp shares a good buy is the fact that they are currently undervalued. The Business Times reports that there was a major sell-off in the early weeks of September, an issue that led the share price to drop to S$15.86. However, great numbers are making the share price rebound.
Further, Venture Corporation introduced the IQOS (I Quit Ordinary Smoking) smoke-free electronic devices that are expected to see experience high sales in 2019. Already, there are approximately 1.8 million IQOS units sold in the second quarter of 2018. In addition, The Edge Singapore notes that 1.7 million units were sold in the first two months of Q3 of 2018. Therefore, this puts the sales at a higher pedestal come 2019.
For this reason, UOB Kay Hian puts a higher premium on the Venture Capital shares. The global investment bank maintains that the target price for the shares in 2019 is $18.20. In part, The Edge Singapore reads:
“Nonetheless, the analyst believes the 3Q18 pick-up in IQOS sales volume points to an encouraging 2019 for Venture Corp, the manufacturer, as it could spur replacement demand and translate to higher next-generation IQOS device production volumes – namely IQOS 3 and IQOS 3 Multi – in the following year.”
CapitaLand Commercial Trust
Singapore’s office sector outlook is said to improve beginning in late 2019 and beyond. Vijay Natajan, an analyst at RHB Banking Group in Singapore observes that most real estate companies will benefit from the positive effects of the outlook. In a sense, this is to say that CapitaLand, which has made substantial investments in property developments, will benefit from the attendant positive sentiment.
According to Natarajan, there is an expected rent reversion since a good number of trusts’ leases will be expiring. It is possible that the high vacancy rates witnessed last year and even this year will go down. The lesser rents will afford more business space and as a result, there will be increased income. Subsequently, there is an expected higher distribution per unit (DPU) which definitely implies higher financial returns.
Speaking to The Edge Singapore, Natajan explains:
“While we expect office rents to rebound by 5-10% for 2018, we believe that the consensus is looking at more than a 10% rent increase for this year. We also note that while Grade A office rents have picked up by 5% (based on CBRE data) over the last two quarters, vacancy rates (Grade A) remain on the high side at 6.2% (5-year average – 5.4%).”
CapitaLand Mall Trust is also another major Singapore REIT that has made the list as a well-known blue chip with a 5.3% dividend yield. It is one of the best performing firms listed on the SGX. It might thus be a good investment option for any investor looking to put money in Singapore’s stock market.
UOB (United Overseas Bank Ltd)
With consistently growing revenue, United Overseas Bank (UOB) is one of the three best banks in Singapore. Also, the bank boasts of a strong foothold in foreign markets like China, Malaysia, and Hong Kong. Over the past few months, the bank has had a flurry of activity in acquiring smaller banks across the ASEAN region. At the centre of the acquisition is the desire to increase the asset base and to also expose its services to a larger customer base.
Data available on Singapore Exchange Limited (SGX) indicates that the corporation is performing well by all metrics available. In agreement, the Asian Nikkei Review indicates that, based on the historical data, UOB is one of the best shares to buy in 2019. The company exhibits a stubbornly growing income even during global downturns.
OCBC (Oversea-Chinese Banking Corporation Limited)
This is another major bank that has operations in Singapore and one that has also been performing exceptionally well in the country’s stock market. It is among the three biggest banks in Singapore, and it offers a variety of financial services including international banking, business banking, consumer banking, and global treasury & investment management. The company has also maintained steady and robust growth in its pre-provision income. This is thanks to its growing net interest margins, its bank assurance businesses, and wealth management.
Singtel (Singapore Telecommunications Limited)
Singtel is another one of Singapore’s major corporations. It has a history of strong performance courtesy of its robust communications businesses that consists of numerous services that cater to the telecommunication needs of people in the country. It also has a long history of service in the industry. It is, therefore, able to generate significant value not only for its customers but also for the stakeholders. Some of its services include integrated information technology and communications solutions, narrowband and broadband internet services, as well as mobile and fixed-line voice and data. Its business is currently doing well and is, therefore, an excellent blue chip to consider investing in.
This blue-chip company has its operations in one of Singapore’s major sectors–the property market. The firm deals with property management, investment, and development. The company’s current portfolio consists of luxury retail property and prime office space that covers roughly 800,000 square meters of space in major Asian cities. It deals with the corporate, commercial and residential property segments.
Ascendas REIT is also traded on the SGX, and it is also one of the hottest picks for anyone looking to invest in blue-chip stocks. It is well known in the country, and it also performs well as a REIT with a 6.3% yield. Its performance is also enforced by the fact that it has operations in Europe, particularly in the UK which is one of the top global markets. Analysts believe that the company also plans to expand its portfolio to Australia in the future. This means that there will be more room to grow and, thus, opportunities will pop up for stock investors.
SGX Singapore Exchange Limited
The SGX itself is a blue-chip stock backed by strong revenue growth over the years. It managed to grow to S$200 million within four years and its revenue reached a new high in 2018 since it was listed in the year 2000. 2018 also marked the year that it achieved its highest profit over the last five years. This means that it has been performing exceptionally well in recent years. Because of this, analysts expect it to continue generating revenue and performing well in the future. It is currently quite an attractive stock pick with its current dividend yield at 4.1%.
GLP (Global Logistic Properties Limited)
GLP is one of Asia’s largest logistics firms that also happens to be an investment holdings company. It also has other businesses that deal with pharmaceuticals, machinery, electronics, retail, and fabrics, among others. As far as the performance is concerned, the company achieved a 48% growth in the last three months of 2016, and it has experienced more growth since then. This is probably courtesy of its diverse businesses.