4 Blue Chip Stocks Looking To Recover From The Pandemic: Singtel (Z74); SIA (C6L); CDL (C09); Genting Singapore (G13)
Over the past 18 months, the COVID-19 pandemic has brought our world to a standstill and has changed the way we live, work, travel and play. Even with the introduction of multiple vaccinations, the virus remains widespread, with more than half a million daily reported cases over the past week.
Around us, neighboring countries such as Malaysia (21,688 cases, 12 August), Indonesia (24,709 cases, 12 August) and Thailand (22,782 cases, 12 August) are still fighting an uphill battle to curb infection spread within their countries.
Even with one of the world’s highest vaccination rates (70% fully vaccinated as of 11 August), Singapore has not been spared. While our situation is far from dire compared to neighboring countries, we have endured multiple rounds of heightened alerts and social and safe-distancing restrictions. More than 66,000 people have been infected in Singapore, and lives have been lost.
Most Singapore businesses have been impacted, some greater than others. As our country moves towards a re-opening again, many of these affected companies are likewise hoping to stage a recovery.
In this week’s edition of 4 Stocks This Week, we take a look at 4 Singapore blue chip stocks that have been badly impacted by the pandemic, and how these blue chip stocks have performed in 2021 as they look to recover from the pandemic.
Singtel (SGX: Z74)
Once seen as one of Singapore’s defensive blue chip stocks that can remain resilient even during bad times, Singtel (SGX: Z74) took a hit on both its topline and bottom line when global travel came to a halt, leading to a decline in revenue from its roaming and prepaid mobile business.
However, compared to last year, things are starting to look better for Singtel. On 12 August, the company reported that its revenue for the past quarter (1 April 2021 to 30 June 2021) has increased by 7.5% to $3.8 billion, as compared to the same period last year. More importantly, net profit is positive once again at $445 million for the quarter, compared to the net loss of $20 million last year where there were exceptional charges.
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Excluding exceptional charges, the underlying net profit for Singtel would be $451 million, up 31% for this quarter compared to $345 million during the same period in 2020.
Singtel share prices rose this week, from $2.28 as of 5 August 2021 (last Friday) to close at $2.39 on 13 August 2021.
SIA (SGX: C6L)
After a poor 1Q2020/2021 last year which saw Singapore’s national carrier SIA (SGX: C6L) suffering a loss of S$1.123 billion, SIA managed to narrow its loss for 1Q2021/2022 to a loss of S$409 million.
Revenue for SIA increased by $444 million (52.2%), as passenger and cargo flights increase as Singapore slowly opens to the rest of the world. It’s also worth noting that in its presentation, cargo and mail comprise of about 67.7% of group revenue with passenger flown revenue at 24.5%.
According to SIA in its media release, as of 30 June 2021, the Group’s shareholders’ equity was $22.3 billion, an increase of $6.4 billion compared to 31 March 2021. Cash and bank balances saw an increase of $5.9 billion, rising to $13.7 billion primarily due to the issuance of Rights 2021 Mandatory Convertible Bonds. Total debt balances increased by $0.7 billion to $15.1 billion, attributable to the increase in lease liabilities as a result of sale-and-leaseback activities.
As the group continues to narrow its operating losses, SIA also announced that it had ended the monthly variable component (MVC) of its Singapore-based staff, which was cut in 2020 due to the pandemic. However, the pay cut for senior management and pilots will continue to remain in effect for now. Nevertheless, this appears to be a good sign that SIA management is confident that the company’s recovery will continue as Singapore opens up its borders for international travel.
SIA share price is currently trading at $5.12.
Read Also: 4 Lessons Investors Can Learn From Investing In SIA (SGX: C6L) In 2020 & 2021
City Development Limited (CDL) (SGX: C09)
Besides telecommunication companies and airlines, property companies were also badly impacted by the pandemic.
City Development Limited (CDL) (SGX: C09) is one of Singapore’s largest real estate developers with projects spanning across residential, commercial, and hospitality developments. For its 1H2021 results, the company reported a loss of $32.1 million due to higher tax expenses and the impact of the prolonged COVID-19 pandemic.
While the group continues to see a decline in revenue for its hotel operations segment, revenue from its property development segment saw an increase of 35.5% for 1H2021, as compared to 1H2020. With more than 2,000 residential units set to be launched in four upcoming developments, CDL has a strong pipeline of units that will boost revenue for the groups’ property development arm.
Source: CDL
With its share price currently at $6.83, CDL is trading at a price-to-book value of 0.77.
As of 30 June 2021, the Group’s has cash reserves of S$2.8 billion and it maintains a strong liquidity position comprising cash and available undrawn committed bank facilities totalling S$4.4 billion. Net gearing ratio (after factoring in fair value on investment properties) stands at 65%.
Genting Singapore (SGX: G13)
With tourism being non-existent for the past 18 months, it comes as no surprise that Genting Singapore (SGX: G13) has been impacted heavily.
In 1H2020, the group recorded a loss of $116 million. Fortunately for shareholders, the group saw its revenue increased by 24% for 1H2021 while it was also able to reduce costs by about 28%. The end result is that the group recorded a profit of $88.2 million for the period.
Moving ahead, much of Genting Singapore’s recovery will be contingent on the border’s re-opening and tourists coming back to Singapore for business and leisure purposes. Also, local tourism will remain vital during this period and could provide a much-needed boost to Genting Singapore.
Genting Singapore is currently trading at $0.805.
Read Also: 4 Singapore Stocks For ESG Investors: City Development (C09); DBS (D05); Capitaland (C31); Sembcorp Industries (U96)
The post 4 Blue Chip Stocks Looking To Recover From The Pandemic: Singtel (Z74); SIA (C6L); CDL (C09); Genting Singapore (G13) appeared first on DollarsAndSense.sg.
SIA aims to hit 50% of pre-Covid passenger network by end-September
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Singapore Airlines Ltd (SGX: C6L) shares declined as much as 2.3% on Monday morning (02 August 2021)
The group posted a net loss of S$409 million for the first quarter of FY2021/2022
It expects to service around 50% of the points that were part of its passenger network prior to the pandemic by 30 September 2021
CIMB reduced its target price on SIA to S$5.54 while keeping a ‘buy’ rating
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SIA stock price: what’s the latest?
Singapore Airlines (SIA) shares fell as much as 2.3% in early trading on Monday, after it reported its financial results for the first quarter of FY2021/2022.
The group posted a net loss of S$409 million for the quarter, an improvement of S$714 million (or 63.6%) year-on-year.
This was primarily driven by better operating performance and the absence of non-cash impairment charges relating to the liquidation of NokScoot.
An increase in both passenger and cargo flown revenue also resulted in group revenue increasing by S$444 million (+52.2%) year-on-year to S$1.3 billion.
Group passenger traffic grew year-on-year on the back of a calibrated increase in passenger capacity, rising to 28% of pre-Covid-19 levels by the end of the quarter in June 2021.
What is the outlook for the rest of FY2021/2022?
Looking ahead, SIA expects passenger capacity to be around 33% of pre-Covid-19 levels in the second quarter of FY2021/2022.
By end-September 2021, it expects to serve around 50% of the points that were part of its passenger network prior to Covid-19.
‘The growing pace of mass vaccination exercises across many countries provides hope for further recovery in international air travel demand,’ SIA said in the earnings release, adding that the risk of new variants and fresh waves of Covid-19 infections in key markets remains a concern.
‘The recovery trajectory will be dependent on government regulations, vaccination rates, and the risk profile of individual regulatory authorities,’ it further noted.
How do analysts view the results?
CIMB analyst Raymond Yap said SIA’s 1Q core net loss of S$430 million was ‘in-line at 26%’ of his firm’s full-year loss estimate of S$1.66 billion.
This was also ‘sharply narrower than the S$1 billion loss for 1QFY21, as cumulative ineffective fuel hedging losses of S$462 million were transferred from balance sheet equity into the P&L (profit and loss) during 1QFY21’.
Despite this achievement, SIA’s core net loss for the quarter was ‘wider than the immediately preceding 4QFY21’s core net loss of S$321 million, most likely due to higher interest expense, and/or lower deferred tax credits’, Yap added.
He reduced his target price on the stock to S$5.54, which equates to a 10.8% upside potential from its most recent price of S$5 on Monday.
He also maintained an ‘add’ call, on the prediction that international travel will resume gradually from late 2021, before becoming more meaningful by the middle of next year.
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