- The recent buzz in the Singapore market was firmly focused on getting coveted concert tickets to Jacky Cheung, Coldplay or Taylor Swift. Singapore’s appeals to these singers are obvious – a strong S$, gateway to the regional markets, well-developed infrastructure, and a post-pandemic population looking to travel and spend. These concerts will attract regional concert goers and will be an added boost to the local tourism industry.
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Singapore’s safe haven stocks turned in strong performances
- Expectations of corporate earnings for this year have generally been pared back. For example, expected 2023 earnings per share (EPS) for the S&P 500 Index was cut from 226.22 at the beginning of 2023 to 217.92 currently, down by 3.7%. However, the Singapore market bucked this downtrend as several companies delivered good earnings growth rates.
- The Straits Times Index’s (STI) 2023 EPS grew from 301.01 at the start of the year to 306.57 currently, up 1.8%. This meant that several STI companies enjoyed good share price appreciation as a result of better earnings and better business outlook.
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- Another company that posted a strong turnaround is Singapore’s national airlines. SIA (SGX:C6L) staged a remarkable recovery in FY23 (financial year ending 31 March 2023). Revenue more than doubled y-o-y to a record S$17.8b, supported by strong passenger flown revenue, which offset weaker cargo revenue. Group passenger capacity reached 79% of pre-COVID levels in March 2023, while SIA and Scoot collectively carried 26.5m passengers, up six times from FY22. SIA's share price touched a post-pandemic high of S$8.05 recently or a gain of 46% from 2022’s year-end price of S$5.53. This is also a 152% recovery from the pandemic lows of S$3.20 in April 2020.
- Banks also posted strong 1Q23 results. DBS (SGX:D05)reported a 43% y-o-y or, 10% q-o-q, increase in 1Q23 net earnings to S$2,571m. The group benefitted from better commercial book income, higher net interest margin (NIM) and strong fee income. 1Q23 dividend per share was 42 cents (versus 36 cents in 1Q22). Management also guided for expense growth of 9-10%, with a cost-income ratio below 40% and full year return on equity (ROE) at above 17%. The base case expectation is for full-year NIM to reach 2.05-2.10%. Management also guided for a baseline 24 cents per year increase in DBS's dividend distribution over the medium term.
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Above is the excerpt from report by OCBC Investment Research.
Clients of OCBC Securities may be the first to access the full report in PDF @ https://www.iocbc.com/.
Carmen Lee OCBC Investment Research | https://www.iocbc.com/ 2023-06-28
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