With the earnings season rolling on, many blue-chip stocks have begun to report their latest first half of 2024 (1H 2024) earnings.
Happily, the first crop of earnings has not disappointed.
Blue chips possess a solid reputation for going through different economic cycles and most of them have a stellar track record of paying out dividends, too.
We highlight three blue-chip stocks that reported higher profits for their recent 1H 2024 earnings and try to determine if they can continue to do so.
OCBC Ltd (SGX: O39)
OCBC is Singapore’s second-largest bank by market capitalisation.
The group offers a comprehensive range of banking, investment, and insurance solutions to its customers.
The lender announced a strong set of earnings for 1H 2024 with total income rising by 7% year on year to S$7.3 billion.
The increase in total income came on the back of a 3% year-on-year increase in net interest income to S$4.9 billion along with a 15% year-on-year jump in non-interest income to S$2.4 billion.
Operating profit before allowances also improved by 7% year on year to S$4.5 billion.
With lower allowances for bad loans, OCBC’s net profit climbed 9% year on year to S$3.9 billion, a new record.
Net interest income rose to a new high despite the bank’s net interest margin easing from 2.26% in the second quarter of 2023 (2Q 2023) to 2.2% in 2Q 2024.
This was offset by an increase in the average interest-generating assets by 5% year on year.
In line with the good results, OCBC hiked its interim dividend by 10% year on year to S$0.44.
The group believes it is on track to achieve its strategic objectives.
It reported an 8% year-on-year increase in wealth management assets under management over the past 18 months.
CEO Helen Wong is confident that OCBC is on track to meet its 2024 targets, with net interest margin expected to be in the range of 2.2% to 2.25%.
She also expects a low single-digit year-on-year loan growth.
Keppel Ltd (SGX: BN4)
Keppel is a global asset manager with expertise in delivering solutions for the infrastructure, real estate, and connectivity sectors.
The group released a mixed set of results for 1H 2024.
Although revenue fell by 13% year on year to S$3.2 billion, Keppel’s core net profit (excluding its legacy offshore and marine assets) rose 7% year on year to S$513 million.
Earnings per share improved by 5% year on year from S$0.269 to S$0.282.
The asset manager reported a return on equity of 9.8% for 1H 2024 based on its core earnings, up from 8.7% back in 1H 2023.
An interim dividend of S$0.15 was declared, unchanged from a year ago.
There were several bright spots to highlight for Keppel’s latest results.
The group grew its funds under management (FUM) by 55% to S$85 billion since the end of last year, aided by the acquisition of Aermont Capital.
Asset management fees also jumped by 75% year on year to S$203 million.
Keppel is also steadily building up its recurring income sources.
For 1H 2024, recurring income grew to S$388 million from S$340 million a year ago.
The asset manager also announced that it achieved an annual cost savings run-rate of more than S$50 million since the beginning of 2023, and is on track towards its target of S$60 million to S$70 million by the end of 2026.
DFI Retail Group (SGX: D01)
DFI Retail Group is a pan-Asian retailer that operates around 11,000 outlets and employs 200,000 staff with brands such as Giant (hypermarket), CS Fresh (supermarket), 7-Eleven (convenience stores) and Guardian (health and beauty stores).
For 1H 2024, revenue dipped by 4% year on year to US$4.4 billion.
Net profit, however, soared from just US$8 million to US$95 million over the same period.
The group’s underlying profit more than doubled year on year from US$33 million to US$76 million.
The interim dividend was raised by 17% year on year to US$3.50 per share.
DFI Retail Group also generated a positive free cash flow of US$372.9 million for 1H 2024.
The retailer has launched a Wellcome app in line with its digital strategy reset and will be relaunching apps for other major brands in the second half of this year.
Its yuu rewards programme continues to gain traction with more than five million members and is logging close to three million active members in Hong Kong.
However, management warned that 2H 2024 could see challenges in the form of macroeconomic uncertainty, shifting customer behaviour, and higher outbound travel.
The group plans to increase its assortment to cater to customer preferences, strengthen its omnichannel presence, and accelerate monetisation incentives through its yuu rewards programme.
DFI Retail Group reiterates its guidance for net profit to come in between US$180 million to US$220 million for 2024.
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Disclosure: Royston Yang does not own shares in any of the companies mentioned.