4 Singapore blue chip stocks that reported higher profits
Stocks
By Gerald Wong, CFA • 22 May 2024
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We profile four Singapore stocks that announced higher year on year profits, including DBS, OCBC, Genting Singapore and ComfortDelgro.
What happened?
During our recent webinar on identifying income opportunities in Singapore, I shared that one of the factors to consider when picking dividend stocks is whether the company’s profits are improving.
This will provide us with some indication on whether the dividends are sustainable.
Hence, scouting for strong businesses with wide moats that have increased their profits is one way to go about identifying suitable investment opportunities.
We earlier wrote about Singapore REITs that raised their distributions in 2023.
In this article, I will identify four Singapore blue-chip companies that recently reported higher profits.
Here are 4 stocks that announced higher earnings - DBS, OCBC, Genting Singapore and ComfortDelgro.
4 Singapore blue chip stocks that reported higher profits
#1 – DBS Group
DBS is Singapore’s largest bank by market capitalisation.
The bank recently saw its market capitalisation cross the pivotal S$100 billion mark, a first for any Singapore company.
This milestone was reached as the lender reported a strong set of earnings (see below) for the first quarter of 2024 (1Q 2024).
DBS’s net interest income rose 8% year on year to S$3.6 billion on the back of steady net interest margins buoyed by higher interest rates.
The group’s total income jumped 13% year on year to S$5.6 billion, boosted in part by a sharp 23% year-on-year increase in fee and commission income to a record S$1 billion.
With expenses rising by just 10% year on year, DBS’s profit before allowances climbed 14% year on year to S$3.5 billion.
Net profit for the lender clocked in at S$2.95 billion, up 15% year on year and at a new record.
An interim dividend of S$0.54 per share was declared, up 42% from the S$0.38 paid out a year ago.
CEO Piyush Gupta sounded an optimistic tone for 2024.
He estimates that the bank’s net interest income will come in above 2023 levels while net profit should also be higher than last year.
Find out how much dividends you would have received as a shareholder of DBS Group in the past 12 months with the calculator below.
Read our analysis of DBS here.
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#2 – OCBC Bank
OCBC is Singapore’s second-largest bank and like DBS, also reported a sparkling set of earnings for 1Q 2024.
Like DBS, OCBC also saw its net interest income improve.
This metric was up 4% year on year at S$2.4 billion as the bank’s net interest margin stayed high at 2.27% for the quarter, just dipping slightly from 2.3% a year ago.
Total income improved by 8% year on year to S$3.6 billion as non-interest income jumped 17% year on year to S$1.2 billion because of higher fees, trading, and insurance income.
Operating profit, like total income, also climbed 8% year on year.
OCBC’s net profit stood at close to S$2 billion, up 5% year on year and also at a new high.
CEO Helen Wong remains confident about the remainder of this year and believes the bank is on track to deliver on its 2024 targets.
Singapore’s second-largest bank also recently completed its acquisition of PT Bank Commonwealth Indonesia with integration expected by the end of this year.
Find out how much dividends you would have received as a shareholder of OCBC Bank in the past 12 months with the calculator below.
Read our analysis of OCBC here.
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#3 – Genting Singapore
Genting Singapore is the owner and operator of the integrated resort (IR) at Resorts World Sentosa (RWS).
RWS features six hotels with around 1,600 rooms, a casino, one of the world’s largest aquariums, and numerous dining, retail and entertainment options.
With the IR enjoying a surge in visitors from increased tourism during Chinese New Year, the group reported a stellar set of results for 1Q 2024.
Revenue for 1Q 2024 surged 62% year on year to S$784.4 million while net profit soared 92% year on year to S$247.4 million.
The group intends to introduce more lifestyle events and experiences to cater to affluent travellers.
In the middle of May, Genting Singapore signed a memorandum of understanding with Sentosa Development Corporation, DBS Bank, and Singapore Tourism Board to establish a Sentosa Precinct Partnership.
This initiative should enhance RWS’s appeal in the longer term.
Construction works for the upgrading of RWS are proceeding smoothly, with the new Minion Land attraction, the Singapore Oceanarium, and the Central Lifestyle Connector to open in phases from 1Q 2025.
In addition, the former Hard Rock Hotel, which was closed for renovation in March this year, will undergo extensive renovations and be rebranded and relaunched as an all-suites luxury hotel in early 2025.
Find out how much dividends you would have received as a shareholder of Genting Singapore in the past 12 months with the calculator below.
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#4 – ComfortDelgro
ComfortDelgro operates a fleet of taxis and buses as well as rail network in Singapore and 11 other countries.
The company reported a profit of S$40.6 million for the 1Q 2024, a 23.8% increase from 1Q 2023.
This would represent ComfortDelgro’s fourth consecutive year-on-year increase in its quarterly profit.
The stronger profit was driven by higher revenue across all its business segments, including Public Transport, Taxi/PHV and Other Public Transport.
For example, its Public Transport business benefitted from improved Singapore rail ridership and fare increases, as well as renewals for its UK business.
Its taxi business also saw better performance from platform fees from 1 July 2023, as well as higher commission rates and fares.
At the same time, ComfortDelgro’s profit margin improved with lower rental discounts in Singapore and China.
ComfortDelgro was in a net cash position as at March 2024, which led to positive interest income for the quarter of 2024.
More recently, ComfortDelgro was awarded four bus franchises in Greater Manchester, UK. This comprises 232 different services served by 420 buses, and will add twice as many services as ComfortDelgro’s public bus portfolio in London.
It also completed the acquisition of A2B Australia Limited, which will add 8,000 vehicles to ComfortDelgro’s existing 21,300 taxi fleet. The acquisition will start contributing to ComfortDelgro’s earnings from the second quarter of 2024.
Find out how much dividends you would have received as a shareholder of ComfortDelgro in the past 12 months with the calculator below.
Related links:
What would Beansprout do?
While the four stocks above did report higher profits, it’s also important to dig deeper into each business to determine if these increases are sustainable.
We can look at the factors that caused the profit increase to determine if they can be sustained over time.
The good news is that dividends may increase with higher business profits.
Hence, income investors may be rewarded with higher dividends from companies that report higher earnings.
Across the four companies, DBS has the higher dividend yield of 6.1%, followed by OCBC at 5.8%, and ComfortDelgro at 5.5%.
Genting Singapore has the lowest dividend yield of 3.9%.
If you are looking for stocks to build your income portfolio with improving earnings and a decent dividend yield, it might be worthwhile adding these names to your watchlist.
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