COVID-19 is like a pesky mosquito that won’t go away.
Many countries had fought valiantly against the virus over the last few months.
Just when it seemed like the human race had won, news broke last week that a possible second wave of infections had appeared in Beijing, China.
Over in the US, a rising number of coronavirus patients had led to concerns that the economy had been reopened too soon, sparking a second deadly wave of infections.
During such troubled times, investors need to select companies that have resilient business models and sturdy financials.
These companies should be able to tide us through the pandemic and allow us to sleep well at night.
If I had S$10,000 that I could deploy into investments right now, I would allocate it in equal portions to these three companies.
iFAST Corporation Limited (SGX: AIY)
iFAST Corporation Limited is a wealth management financial technology (fintech) platform.
The group hosts a well-established fintech ecosystem linking product providers with its clients.
iFAST is present in Singapore, Malaysia, Hong Kong, China and India. The group had assets under administration (AUA) of S$9.54 billion as of 31 March 2020.
As the group conducts the bulk of its business through online channels, it has been minimally affected by the pandemic.
For the first quarter of the fiscal year 2020, iFAST posted year on year gross revenue growth of 41.5%, while net profit attributable to shareholders jumped 126.8% year on year to S$3.6 million.
Although AUA fell from a record high of S$10 billion at the end of 2019 to S$9.54 billion due to volatility in stock markets, the group has regained the S$10 billion as of 22 April.
iFAST expects the acceleration of the pace of digitalisation of financial services to benefit it in the medium to long-term.
Barring a substantial worsening of global financial markets, the group expects to record higher revenue and net profits for 2020.
DBS Group Holdings Ltd (SGX: D05)
DBS Group Holdings Ltd, or DBS, is one of Singapore’s three largest banks.
The group offers a comprehensive range of banking services ranging from corporate banking to asset management, catering to both individuals and businesses.
Total revenue for DBS crossed S$4 billion for the first time when the group reported its first-quarter 2020 financial results.
Profit before allowances also hit a new high of S$2.47 billion.
However, net profit fell 29% year on year mainly due to general allowances of S$700 million taken up due to the COVID-19 pandemic.
Despite the challenges faced, the bank maintained a high liquidity coverage ratio of 133% and a net stable funding ratio of 112%. Both ratios are above regulatory requirements.
The first-quarter interim dividend was maintained at S$0.33, in line with that declared in the previous quarter.
Although net interest margin may come under pressure during the rest of the year due to lower global interest rates, DBS can make up for this through non-interest income, which rose 39% year on year to S$712 million for the quarter.
Micro-Mechanics (Holdings) Ltd (SGX: 5DD)
Micro-Mechanics, or MMH, designs, manufactures and markets high precision tools and parts that are used in the semiconductor industry.
The group has manufacturing facilities located in Singapore, Malaysia, China, the Philippines and the USA.
For the 9-months ended 31 March 2020, revenue inched up 3.1% year on year to S$47.8 million.
Net profit rose by 4.6% year on year to S$10.7 million.
The group also maintained a clean balance sheet with S$16.1 million in cash with no debt.
MMH’s factories located in Malaysia and California had to suspend operations briefly in compliance with respective government directives to limit the spread of COVID-19.
These plants have since been allowed to reopen, albeit with reduced staffing levels, as semiconductor manufacturing is deemed an essential service.
CEO Chris Borch believes that the semiconductor industry is poised for a prolonged period of steady growth.
Despite the short-term headwinds faced by the group, the long-term prospects look decidedly sanguine.
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Disclaimer: Royston Yang owns shares in iFAST Corporation Limited and DBS Group Holdings Ltd.
