As March draws to a close, there’s a feeling of optimism in the air.
Singapore further eased restrictions as the pandemic recedes and also introduced a new vaccinated travel framework to revitalise the airline and tourism industries.
Russia has also signalled its intention to scale down its military operations around Kyiv, Ukraine’s capital, in what looks to be the first sign of positive news in the Russia-Ukraine war.
As economic conditions improve, businesses should also report higher earnings and cash flows.
We have compiled a list of companies with positive catalysts that we believe can sustain their growth over the medium term.
Here are three stocks you can consider adding to your investment watchlist for April.
DBS Group (SGX: D05)
Singapore’s largest bank needs no introduction.
The lender reported a strong set of earnings for its fiscal 2021 (FY2021).
Despite a slight 2% year on year dip in total income, net profit for FY2021 surged by 44% year on year to hit a record high of S$6.8 billion.
The group also upped its quarterly dividend to S$0.36 per share, a 9.1% increase from the S$0.32 that was paid out in the previous quarter.
The annualised dividend of S$1.44 represents a forward dividend yield of 4%.
The bank’s growth momentum could continue for the rest of this year.
The US Federal Reserve had just increased interest rates by 0.25% earlier this month and is signalling further increases for the year.
Higher rates should translate to higher net interest income for the lender as it can reprice its loans faster than it needs to pay higher interest on its deposits.
DBS’ recent purchase of Citigroup’s (NYSE: C) Taiwan division for S$2.2 billion also paves the way for the group to expand its franchise in the country.
AEM Holdings Ltd (SGX: AWX)
AEM provides comprehensive testing solutions for the semiconductor and electronics industries.
The group has manufacturing plants located in Singapore, Malaysia, China and Finland.
Last year, Temasek Holdings became AEM’s largest shareholder through a placement exercise.
The testing specialist had reported a creditable set of results for FY2021, with revenue rising by 9% year on year to S$565.5 million.
However, operating profit dipped by 1% year on year to S$111.8 million while net profit fell by 6% year on year to S$92 million.
A final dividend of S$0.05 was proposed. Together with the interim dividend of S$0.026, the total dividend for FY2021 came up to S$0.076.
Shares of AEM offer a trailing dividend yield of 1.6%.
The group is continuing its high-volume ramp up at customer sites and expects demand to remain strong this year.
According to VLSI research, the System Level Testing industry is expected to grow more than four times faster than wafer sorting and functional test due to the increased demand for semiconductor chips for critical applications.
AEM has guided for FY2022’s revenue to be in the range of S$670 million to S$720 million.
At the midpoint of this range, it represents a nearly 23% year on year jump.
Ascott Residence Trust (SGX: HMN)
Ascott Residence Trust, or ART, is the largest hospitality trust with total assets worth S$7.7 billion as of 31 December 2021.
The trust’s portfolio comprises 93 properties with 17,000 units spread out across 43 cities in 15 countries.
ART reported a good set of numbers for FY2021, with revenue rising 7% year on year to S$394.4 million.
Revenue per available unit (RevPAU) saw a 17% year on year jump to S$69 per day, a sign that a recovery is well underway.
As a result, distribution per stapled security (DPSS) surged by 43% year on year to S$0.0432.
The trust’s units offer a historical distribution yield of around 3.8%.
There could be more upside for the trust in the coming months.
With Singapore’s further reopening, tourism is expected to thrive, benefitting ART’s RevPAU and occupancy levels.
ART had also announced a slew of acquisitions in FY2021, with around S$700 million invested in eight US student accommodation properties.
These purchases should contribute positively to DPSS for this year.
ART’s medium-term target allocation for these longer-stay assets has been raised to between 25% to 30%, up from 15% to 20% previously.
Earlier this month, the trust made another acquisition of four rental housing properties and one student accommodation property in Japan for S$125 million.
This purchase will lift DPSS by around 1.7% and is expected to be completed by the second quarter of 2023.
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Disclaimer: Royston Yang owns shares of DBS Group.
